Job gains pulled again by the formal sector.
Andrés Pérez M., Vittorio Peretti & Ignacio Martinez Labra
During the quarter ending in January employment increased 0.3% MoM/SA, the second sequential monthly gain, but overall employment levels have stagnated over the last semester as the anticipated growth slowdown and still elevated economic policy uncertainty prevent a meaningful expansion of the payroll. In annual terms, employment increased 3.4% YoY (3.3% in 4Q), lifted by salaried private posts, while self-employment fell. The labor force grew 4.1% YoY (similar to in 4Q22), leading to an unemployment rate of 8% (+70bps over one year; in line with the increase in 4Q22), as expected by the market. Employment sits 1% below pre-pandemic levels (SA) while the labor participation rate rose to 60.6% from 60.3% in the previous print, gradually inching closer to the pre-covid level (around 63%).
Job gains remain in the formal sector and salaried. In annual terms, total private salaried posts rose by 4.8% YoY (6% in 4Q), lifting total employment growth (3.4% YoY). Self-employment fell 1.6% YoY (-2.3% in 4Q). Formal employment increased 4.5% YoY (4.6% in 3Q), while informal jobs grew 0.6% YoY. The informality rate sits at 27.3% (roughly stable).
While the economy slowed materially in 2022, the adjustment was more gradual than anticipated, in line with a labor market that has also been somewhat more resilient. Importantly, layoffs have not increased materially so far. Nevertheless, with financial conditions tight (and the economic effect materializing with a lag), several business surveys suggesting firms are unwilling to expand the payroll, and online job posts well below pre-Covid levels, we expect the labor market to gradually loosen as the year unfolds. We see the unemployment rate averaging 9% this year (7.9% in 2022).
Andrés Pérez M.
Ignacio Martinez Labra