Despite the sequential employment drop in April, the unemployment rate remained low. The urban unemployment rate fell to 8.7%, a drop of 1.6pp from April 2024, well below the Bloomberg market consensus of 9.6% and our 9.9% call. The national unemployment rate reached 8.8% in April, down 1.9pp over one year. Employment rose 3.1% yoy in April (+4.7% in March), while the labor force increased by 1.0% (+2.7% in the previous month). The participation rate fell 0.2pp over one year to 63.7%. Sequentially, employment dropped from 0.8% from March (SA; +0.4% in the previous month), but the unemployment rate (SA) fell to 8.8% (-0.2pp mom), the lowest level since 2000 (well below BanRep’s NAIRU estimate of 10.2%), maintaining demand-side inflationary pressures.
Self-employment and private salaried posts continued to boost job creation. In the quarter ending April, employment increased 4.0% yoy (+4.3% in the previous quarter). The annual increase was pulled up by private salaried posts (+2.6% yoy, +3.1% yoy in the 1Q25), while self-employment increased 6.5% (+7.0% in the 1Q25). On the other hand, public sector jobs fell 3.3% (-4.2% in the 1Q25). Real state, public administration, transport and hotels and restaurants were key job drivers on an annual basis.
Our Take: We expect the unemployment rate to remain low this year at 9.8%, given favorable dynamics in key sectors such as commerce and manufacturing. The upbeat labor market performance amid sticky inflation is an argument for only a gradual cutting cycle by BanRep.