Brazil’s jobless rate hits lowest level ever amid inflation concerns

11:30 am Friday, November 29th, 2024

SAO PAULO (Reuters) – Brazil’s jobless rate hit its lowest level on record in the three months through to October, data from statistics agency IBGE showed on Friday, an indicator that has been cheered by the government although triggering inflationary concerns.

In Latin America’s largest economy, the unemployment rate stood at 6.2% in the August-October quarter, in line with market expectations in a Reuters poll and the lowest ever in the current IBGE data series, which dates back to 2012.

Brazil’s jobless rate had already been hovering around historically low levels for the past year, showing an unfading strength, which has contributed to the central bank’s decision to tighten its monetary policy again.

The bank kicked off an interest rate cycle in September and accelerated it with a 50 basis-point increase earlier this month amid stronger-than-expected economic activity and fiscal concerns, leaving the door open for further hikes.

“Different sources of labor market information continue suggesting the same conclusion: the labor market is tight,” JPMorgan economists Vinicius Moreira and Cassiana Fernandez said in a note to clients.

The investment bank on Thursday forecast the Brazilian central bank would hike its benchmark interest rate by 100 basis points to 12.25% in December amid a “fiscal-monetary conflict,” and estimated a terminal rate of 14.25%.

On the other hand, President Luiz Inacio Lula da Silva, who has made reducing unemployment a top priority, celebrated the latest figures. He posted a headline on X highlighting that the jobless rate was now at a historically low level.

According to IBGE, the number of jobless people in Brazil was 6.8 million in the August-October period, down 8% quarter-on-quarter. Employed citizens totaled 103.6 million, up 1.5% on a sequential basis.

Average real wages were up 0.8% in the quarter to 3,255 reais ($534.39).

($1 = 6.0911 reais)

(Reporting by Gabriel Araujo; Editing by Angus MacSwan)