The unemployment rate remained in double digits, but employment increased sequentially. The national unemployment rate reached 10.5%, 0.2pp down over one year, while the urban unemployment rate came in at 11.2% in May (+0.2pp over one year), above the Bloomberg market consensus and our call of 10.9%. Total employment expanded 1.7% yoy in May (3.6% previously), while the labor force rose 1.5% (3.1% in April). Overall, the participation rate increased 0.1pp from May last year to 63.9% (but still 0.8pp below May 2019). At the margin, total employment increased 0.4% from April (SA), and 2.1% qoq/sa.
Private and self-employment drive job creation. In the quarter ending May, employment increased 3.5% yoy, pulled by private salaried posts growth of 4.3% yoy (+6.2% in 1Q), while self-employment increased 3.9% yoy (2.0% in 1Q). Meanwhile, public sector jobs rose 1.3% yoy (0.1% drop in 1Q).
We expect the average unemployment rate to reach 11.5% this year (11.2% in 2022; 10.9% in 2019). Looking ahead, labor demand is likely to cool, as tight monetary policy, high interest rates and elevated economic uncertainty contribute to the slowdown in economic activity.