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Labor demand is likely to cool ahead

Strong sequential employment growth amid a milder labor force increase led to further drop in the unemployment rate in March. The national unemployment rate fell to 10%, 2.1pp down over one year. The urban unemployment rate fell to 10.5% (-2.1pp yoy), below the Bloomberg market consensus and our 11.3% call. Sequentially, employment increased 1.4% MoM/SA, the fourth consecutive increase. As a result, the 1Q unemployment rate was 11.7% (-1.5pp yoy) falling 40bps (SA) from 4Q22.


Private salaried posts drive employment dynamics. In 1Q23, employment increased 3.8% yoy (5.8% in 4Q), pulled up by private salaried posts (6.2% yoy; 14.2% in 4Q22). Self-employment rose 2.0% yoy (1.5% decline in 4Q), while public sector jobs were broadly stable. Labor force growth slowed to 2.0% yoy (3.8% in 4Q22).

We expect the average unemployment rate to reach 11.5% this year (11.2% in 2022; 10.9% in 2019). Looking ahead, labor demand is likely to cool due to the slowdown in economic activity. 


Vittorio Peretti 

Carolina Monzón