Even though employment contracted sequentially, the unemployment rate remained in the single digits. The national unemployment rate reached 9.3%, 1.5pp down over one year, while the urban unemployment rate came in at 9.6% in September (-0.8pp over one year), in line with our call and slightly above the Bloomberg market consensus of 9.5%. Employment expanded 3.2% yoy in September (4.5% previously), while the labor force rose by 1.5% (3.0% in August). The participation rate increased by 0.1pp from September last year to 64.2%. At the margin, total employment decreased by 0.5% MoM/SA from August (0.1% drop previously), and rose 1.2% from 2Q to 3Q23. As a result, the unemployment rate during 3Q23 was 9.4% (-1.4pp yoy), falling by 84bps (SA) from the previous quarter.
Private salaried posts drive employment dynamics. During 3Q23, employment increased 4.3% yoy (3.3% in 2Q), pulled up by private salaried posts (5.8% yoy; 6.2% in 2Q23). Self-employment increased 2.8% (1.8% in 2Q), and public sector jobs recovered in the 3Q, increasing by 1.3% (1.8% drop in 2Q). Hospitality, construction and public administration were key job drivers in the 3Q23.
Even though economic activity has decelerated, the unemployment rate has continued to trend down. The second consecutive sequential contraction in employment suggests the labor market may be turning the corner, driven by the contractionary monetary policy stance, weak business confidence, and tighter global financial conditions. We expect the average unemployment rate to reach 10.3% this year, down from 11.2% in 2022 (10.9% in 2019.)
