The unemployment rate continued to fall in October, despite weakening employment dynamics. The national unemployment rate reached 9.2%, 0.5pp down over one year, well below the Bloomberg market consensus of 9.4% and our 9.5% call. Meanwhile, the urban unemployment rate came in at 9.0% in October (-0.9pp over one year). Employment expanded 2.1% yoy in October (3.2% previously), while the labor force rose by 1.6% (+1.5% previously). The participation rate increased by 0.1pp from October last year to 64.0%, but down at the margin. Sequentially, total employment fell 1.4% MoM/SA from September (0.7% drop previously), the third consecutive fall, suggesting the effect contractionary monetary policy and high inflation on activity dynamics is filtering through to a gradual loosening of the labor market.
Private salaried posts remained the employment pull over one year. In the quarter ending October, employment increased 3.3% yoy (4.3% in 3Q), supported by private salaried posts (5.1% yoy; 5.8% in 3Q). Self-employment increased 1.4% (2.8% in 3Q), while public sectors jobs grew 3.5% (+1.3% in 3Q). Real estate activities, public administration and hospitality were key job drivers over twelve months.
We expect the average unemployment rate to reach 10.3% this year, down from 11.2% in 2022 (10.9% in 2019). Growing signs of deteriorating employment dynamics, amid weakening activity, will consolidate calls for the start of an easing cycle, despite sticky inflation. We expect rate cuts to start in 1Q24.
