COLOMBIA – Labor market remained tight in October

In October, employment increased sequentially, while the unemployment rate remained at historically low levels. According to DANE’s October’s labor market report, the national unemployment rate fell to 8.2%, down 0.9pp over one year, while the urban unemployment rate stood at 8.0% in October, a drop of 1.4pp over one year, below the Bloomberg market consensus of 8.2%, but above our 7.6% call. Employment increased by 4.2% YoY in October (+3.1% in September), while the labor force rose by 3.1% (+2.0% in the previous month). The participation rate increased to 65% (+63.9% in the previous month). Sequentially, employment increased by 1.1% (+0.5% previously), while the unemployment rate (SA) sits at 8.9% (broadly stable from September). Meanwhile, the urban unemployment rate (SA) increased to 8.8% (+0.2pp MoM; BanRep’s NAIRU: 10.2%) amid a resilient job creation (374k new jobs YTD, 131k in October).

Private and self-employment payrolls continued to be key job drivers this month.  In the quarter ending October, employment rose by 3.0% YoY (+2.7% in 3Q25). This annual increase was driven by a 3.5% increase in private salaried posts (+5.5% in 3Q25), while self-employment posts rose by 3.1% (+1.4% in the previous quarter). Conversely, public sector jobs fell by 1.0% (-4.8% in 3Q25). Financial and insurance activities, hotels and restaurants and transport were key job drivers this month.

Our take: The positive trend observed throughout the year continued in October. We foresee an average unemployment rate of 9.0% for 2025, compared to 10.2% in 2024. With a robust labor market, persistent inflation, and fiscal imbalances, BanRep will likely remain on hold for an extended period.