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Sequential employment gains fail to offset the labor force increase.

Andrés Pérez M., Vittorio Peretti & Ignacio Martinez Labra


The unemployment rate remained in double digits at the start of the year, as mild sequential employment gains fail to offset the labor force increase. The national unemployment rate reached 13.7% in January, down 90bps over one year, but a far milder narrowing compared to the 1.8pp average annual adjustment during 2H22. The seasonally adjusted unemployment rate rose 30bps from December to 12%. The urban unemployment rate reached 14.5%, down 0.3pp from last year (-0.6pp in December). The urban employment rate exceeded the Bloomberg market consensus of 14.1% and our 13.6% call. Total employment expanded 3.8% yoy in January (4.5% previously) while the participation rate rose 0.8pp from January last year to 63.4% (yet still remains 1.6pp below the rate in January 2019). At the margin, total employment expanded 0.5% MoM/SA from December, but during the quarter still fell 0.5% qoq/sa.

Private sector continues to drive annual job gains. In the quarter ending in January, employment increased 4.7% yoy (5.8% in 4Q and 8.0% in 3Q22), pulled up by private salaried posts (13.0% yoy; 14.2 in 4Q22) while government employment fell 11.5% yoy (9.7% drop in 4Q) and self-employment decreased 0.9% yoy (-0.64% in 4Q).

We expect the average unemployment rate to reach 11.8% this year (11.2% in 2022; 10.9% in 2019) as tight monetary policy, a notable rise in the minimum wage and elevated economic policy uncertainty contribute to the weakening of the labor market.

Vittorio Peretti

Carolina Monzón