Itaú BBA - COLOMBIA – Employment dynamics continued to deteriorate in January

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COLOMBIA – Employment dynamics continued to deteriorate in January

March 1, 2019

Weak labor market numbers reinforce our view that interest rate hikes remain afar

The January national unemployment rate of 12.8% was above the 11.8% recorded one year earlier, explained by higher urban unemployment. The urban unemployment rate increased to 13.7% from 13.4% (one year earlier), in line with the Bloomberg market consensus (13.7%) and our 13.6% expectation. Yet, the seasonally adjusted labor market series showed urban unemployment falling 0.6 percentage points from December to 10.7%, while further loosening in rural areas (to 10.1% from 9.3%) led to total unemployment picking up to 10.4% (10.2% in December).

Job quality remains low as self-employment remains the primary job creator. In the quarter, 17 thousand jobs were destroyed over a twelve-month period (-0.1% yoy, stable from 4Q18). While self-employment added 83 thousand posts (0.9% yoy, 2.5% 4Q18), the rest of non-waged employment shrunk by 100 thousand in the quarter (-3.4% yoy, -5.4% in 4Q18). Waged employment growth improved to +0.1% yoy (from -0.9% in 4Q18) lifted by the public sector adding 41 thousand jobs (5.1%), but the private sector shed 31 thousand (-0.4%). Construction supported employment growth, adding 112 thousand jobs (8.0% yoy, 6.6% in 4Q18), in line with the recent recovery in that sector. Social and personal services (+2.7% yoy, +2.1% in 4Q18) and manufacturing (+2.5% yoy, vs. 2.9% 4Q18) also pulled up job creation. Meanwhile, commerce (which s hed 234 thousand jobs; -3.8% yoy, -4.1% in 4Q18), was the main drag in the quarter.

In all, the labor market of Colombia remains weak, despite some growth improvement, which is consistent with the central bank’s (and our) view that growth remains below potential. Thus, the numbers reinforce our view that interest rate hikes are still far.

 

Miguel Ricaurte
Carolina Monzón



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