The labor market remained solid with employment increasing at the margin in the 1Q25. According to DANE’s March labor market survey, the national unemployment rate reached 9.6%, down 1.7pp over one year, while the urban unemployment rate was 9.3% in March (dropping 1.4pp over one year). The urban unemployment rate was below the Bloomberg market consensus and our call of 9.5%. Total employment increased 4.7% yoy in March (+4.3% in February), while the labor force rose by 2.7% (+2.8% previously). The participation rate increased by 0.8pp from March 2024 to 64.7%. In 1Q25, the seasonally adjusted unemployment rate fell to 9.3%, down 0.4pp from 4Q24. Sequentially, employment rose by 0.5% mom/SA from February to March, and rose by a brisk 2.0% between 4Q24 and 1Q25.
Private salaried and self-employment posts were the main job creators in the 1Q. During the 1Q25, employment growth increased to 4.3% yoy, above from the 2.2% in 4Q24. The annual increase was pulled up by private salaried posts (+3.1% yoy; +2.7% in 4Q24), while self-employment increased by 7.0% (+1.9% in 4Q24). On the other hand, public sector jobs fell by 4.2% (+1.9% in 4Q24), amid national government budget restrictions. Hotels and restaurants, construction, manufacturing and commerce were key job drivers in the 1Q25.
Our Take: We expect the average unemployment rate to remain stable this year at 10.2%, but risks tilt to an even lower rate. The recovery of key sectors such as commerce has helped strengthen the labor market. A tight labor market, amid fiscal and global economic uncertainty favor a cautious central bank.