Itaú BBA - COLOMBIA – Employment sinks in April

Macro Latam

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COLOMBIA – Employment sinks in April

mayo 31, 2019

Falling participation and overall job shedding does not bode well for consumption dynamism ahead.

A notable drop in the participation rate contained the rise in the unemployment rate in April. The national unemployment rate came in at 10.3% in April, up 0.8pp over twelve months, driven by rises in both the urban and rural joblessness. The urban unemployment rate came in at 11.1% (10.7% one year ago), below the 11.5% Bloomberg market consensus and our 11.4% estimate. Fewer jobs were registered this year, primarily due to falling self-employment. The one positive from the data is that salaried employment continued to rise. Still, falling participation and overall job shedding does not bode well for consumption dynamism ahead.


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In April, jobs were shed (-3.4% yoy) at the fastest pace since the financial crisis. Meanwhile, in the quarter ending in April, total employment fell 0.7% yoy (-0.1% in 4Q18), resulting in the unemployment rate rising 1.1pp over twelve months to 11%. Preventing a faster rise was the half a percentage point drop in participation in the rolling quarter. Job destruction was led by the 3.6% yoy decline in self-employment (+2.5% in 4Q18). Meanwhile, salaried government employment grew at a still upbeat near double-digit pace, while private salaried posts continued to recover (2.2% yoy vs -1.1% in 4Q18). Agriculture led the job shedding, but job destruction was broad-based (gains were only seen in mining, construction finance and social services).


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As the labor market performance underwhelms, the unemployment rate is set to rise for the fourth consecutive year (to 10.2% from 9.7% for 2018). Labor market weakness, along with disappointing activity data and controlled inflation would likely motivate the central bank to retain monetary stimulus going forward.


 

 

Miguel Ricaurte
Carolina Monzón



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