Brazil’s job market reached a notable milestone in the second quarter of 2024, with the unemployment rate falling to 6.9%, the lowest level in ten years. The figures, released by the IBGE (Brazilian Institute of Geography and Statistics) on Wednesday and reported by Reuters, indicate a steady economic recovery and an unprecedented number of employed individuals in the country.
For the April-to-June period, the jobless rate dropped from 7.9% in the previous quarter, reflecting a significant improvement in employment conditions. This decline marks the lowest unemployment rate for this period since 2014. The number of employed Brazilians reached 101.8 million, the highest level recorded since IBGE began its data series in 2012.
Despite persistent high interest rates, which have been a concern for potential inflationary pressures, Brazil’s job market has remained resilient over the past year. President Luiz Inácio Lula da Silva expressed optimism about the data, highlighting the administration’s commitment to job creation. “This is excellent news, though not unexpected. Our ongoing efforts are yielding positive results, with more job opportunities for Brazilians,” Lula said on X (formerly Twitter).
However, central bank officials have warned that the strong labor market might contribute to inflation in the services sector, which could affect monetary policy. Last month, the central bank paused its rate-cutting cycle, keeping the Selic rate at 10.50% after reducing it from a high of 13.75%. The decision reflected concerns over inflation expectations.
Rafaela Vitoria, chief economist at lender Inter, noted that while the Selic rate is currently sufficient for managing inflation, future pressures might necessitate maintaining a restrictive monetary policy for a longer period. “Given the current inflationary environment, the central bank may need to keep its policy tight,” Vitoria explained.
In addition to the unemployment figures, IBGE reported a 12.5% decrease in the number of unemployed individuals from the previous quarter, totaling 7.5 million. Real wages also saw a rise of 1.8%, reaching an average of 3,214 reais (approximately $572).
Recent government data also highlighted that Brazil’s economy outperformed expectations by creating more formal jobs in June. Economists at Itau have adjusted their forecasts for the jobless rate at the end of the year, projecting a continued downward trend. “The significant reduction in unemployment in the first half of the year suggests a tight labor market, supporting our revised jobless rate predictions,” Itau analysts stated.
