The labor market showed resilience at the start of the year, in contrast to weak activity dynamics. The unemployment rate fell to 12.7% in January, down 1.0pp over one year. Meanwhile, the urban unemployment rate came in at 12.4% (-2.1pp over one year), below the Bloomberg market consensus of 13.6% and our 13.7% call. Employment grew by 2.5% yoy (+1.8% in December), while the labor force rose by 1.3% (+1.5% previously). The participation rate fell by 0.1pp from January last year to 63.3%. Sequentially, total employment rose 0.9% MoM/SA from December (lifted by the 2.7% rise in urban areas).
Private salaried posts remain a key employment driver. The employment increase of 2.5% yoy was supported by the 2.4% private salaried posts increase (3.2% yoy in December), while self-employment increased by 1.9% (+2.5% previously). Meanwhile, public sector jobs slightly increased by 0.2% (-0.8% in the previous month). Real estate activities, financial and insurance services and agriculture were the key job drivers over twelve months.
We expect the unemployment rate to average 10.5% this year, somewhat above the 10.2% average of 2023 (11.2% in 2022). Even though the labor market surprised favorably at the start of the year, activity is weak, inflation still high and monetary policy significantly restrictive, likely supporting some loosening ahead.
