Itaú BBA - Unemployment hits 12% in December

Macro Brazil

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Unemployment hits 12% in December

January 31, 2017

Unemployment rate is 3 p.p. higher than in December 2015

According to the national household survey (PNAD Contínua), Brazil’s nation-wide unemployment rate reached 12.0% in December. Using our seasonal adjustment, the rate increased for the 25th consecutive month, to 12.6% in December from 12.3% in November. We expect unemployment to continue on an upward trend throughout the year.

The real wage bill increased for the second consecutive month on the margin, smoothing the downward trend seen in recent months.

Unemployment rate is 3 p.p. higher than in December 2015

The nation-wide unemployment rate reached 12.0% in December[1] , slightly above our estimate and market consensus (both at 11.9%).The indicator increased 3.0 p.p. from 9.0% one year earlier. Using our seasonal adjustment, the unemployment rate rose to 12.6% in December from 12.3% in November. Employment shrank 0.1% month-over-month seasonally adjusted and 2.1% year-over-year. The labor force expanded 0.3% sequentially and 1.3% year-over-year.

The participation rate (labor force over working-age population) increased to 61.5%, slightly above the previous month and its historical average (both at 61.3%).

Real wage bill expands for the second consecutive month

Nominal wages climbed 0.4% month-over-month seasonally adjusted in December, but growth slowed down to 7.2% from 7.5% year-over-year.

The average real wage increased 0.2% month-over-month seasonally adjusted and gained 0.3% year-over-year, after 15 consecutive declines in that metric. The real wage bill is now 1.5% lower than one year ago, although it expanded for the second consecutive month by 0.1% in sequential terms.

Conclusion 

The PNADContínua survey continues to show an increase in unemployment, with the rate climbing to 12.6% from 12.3% (using our seasonal adjustment), marking the 25th consecutive hike. We expect unemployment to continue its upward trend, as the weakness in economic activity has not yet been fully reflected in the labor market. 



 

Rodrigo Miyamoto


[1] PNAD Contínua figures are released as 3-month moving averages.


 



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