2026/06/30 | Vittorio Peretti, Carolina Monzón, Juan Robayo & Angela Gonzalez
According to DANE’s labor report for May, the national unemployment rate fell 1.0pp from the previous year to 8.0%. The urban unemployment rate dropped by 0.5pp in comparison to the previous year to 8.5%, below the Bloomberg market consensus and our 8.9% call. Employment increased by 4.0% YoY in May (+3.0% in April). The labor force rose by 2.9% YoY (+3.0% in the previous month). The participation rate increased by 1.0pp to 64.9%. Sequentially, employment rose by 0.8% MoM (-0.2% in the previous month). The seasonally adjusted urban unemployment rate dropped to 8.5% from 8.8% in the previous month, sitting well below BanRep’s NAIRU of 9.6%. The seasonally adjusted national unemployment rate also fell by 0.5pp from April to 8.1%.
Public sector jobs drive employment rebound. In the quarter ending May, employment grew by 3.3% YoY, up from 2.3% in 1Q26. This acceleration was driven by a 4.3% YoY increase in public sector employment (+1.0% in 1Q26), alongside growth in private salaried jobs (+3.4% YoY, versus +3.0% in 1Q26) and self-employment (+2.9% YoY, compared with +1.9% in 1Q26). Financial and insurance activities, public administration, and construction were the main contributors to job creation during the quarter, while employment in agriculture declined.
Our take: Despite weak investment dynamics and rising costs, the labor market continues to show resilience with employment increasing at the margin. Therefore, we now expect an average unemployment rate this year of 9.5% (10.2% previously expected). A tight labor market and elevated inflation expectations support continued monetary policy tightening ahead.