Unemployment is expected to remain high and persistent. Considering also the somewhat less favourable outlook in labour intensive sectors and the growing structural component in the current unemployment figures we may see sluggish labour market conditions for some time in the future, despite decreasing labour cost conditions.
And while the performance of longer-term bonds appears in part to be dictated by investor expectations of subdued growth both globally and locally, the planned faster reduction in the government budget deficit compared with initial National Treasury targets may also have reassured investors.