Brazil’s jobless rate came in slightly above market expectations in the final quarter of 2024 but reached its lowest yearly average for the current data series after the labor market showed continued resilience throughout last year.
Unemployment in Latin America’s largest economy hit 6.2% in the three months through December, statistics agency IBGE said on Friday, up from 6.1% in the previous rolling quarter and above the 6.1% expected in a Reuters poll of economists.
The average unemployment rate in 2024, however, was 6.6%, the lowest level since the beginning of the data series in 2012.
Brazil’s jobless rate has been hovering around historically low levels for the past few quarters, an indicator cheered by the government but that has contributed to the central bank hiking interest rates.
“In our view, the job market will remain heated and Brazil is expected to maintain an unemployment rate close to 6% at the end of this year and the next – a very low level by our historical standards,” C6 Bank economist Claudia Moreno said.
The strong job market with high wages has supported economic growth, fueling the consumption of goods and services, but triggered inflationary concerns as consumer prices remain above the central bank’s 3% target.
On Wednesday, the monetary authority raised interest rates by 100 basis points to 13.25% and kept its guidance for another hike of that size in March, leaving the door open for subsequent moves.
Despite the slightly higher-than-expected jobless rate in the fourth quarter, adding to separate data that on Thursday showed that Brazil created fewer formal jobs than forecast in December, the bank’s stance should not change in the short term.
“It is too early to talk about a significant slowdown in the labor market to ease the inflation scenario and monetary policy,” Galapagos Capital chief economist Tatiana Pinheiro said.
“We maintain our forecast that the central bank will carry out an accelerated monetary tightening cycle, with a 100-basis-point hike in March and a 75-basis-point one in May, taking the Selic rate to 15%.”
(Reporting Camila Moreira; Writing by Isabel Teles; Editing by Gabriel Araujo and Louise Heavens)
