The unemployment rate remained in one-digit terrain, with employment increasing sequentially. The national unemployment rate reached 9.6%, 1.4pp down over one year, while the urban unemployment rate came in at 9.8% in July (-1.5pp over one year), above the Bloomberg market consensus of 9.5% and our 8.9% call. Total employment expanded 5.1% yoy in July (4.7% previously), while the labor force rose 3.5% (2.5% in June). The participation rate increased 1.3pp from July last year to 64.8%. At the margin, total employment expanded 0.4% MoM/SA from June, building on the 1.6% gain previously, leading to the lowest unemployment rate since April 2017.
Private salaried posts drive employment dynamics. In the quarter ending July, employment increased 3.8% yoy (3.3% in 2Q), supported by growth in private salaried posts (7.5% yoy; 6.2% in 2Q23). Self-employment increased 2.6% (1.8% in 2Q), while public sector jobs fell 6.7% yoy (1.8% drop in 2Q). Commerce, transportation and the hospitality industry were key job drivers over twelve months.
Labor market dynamics continue to perform favorably, but the effects of a prolonged contractionary monetary policy will likely result in some loosening as the economy cools. Nevertheless, we expect the average unemployment rate to reach 10.3% this year, down from 11.2% in 2022 (10.9% in 2019).