Brazil's unemployment rate rose slightly in September despite a pick up in hiring as more people started looking for jobs, government data showed on Thursday. Brazil's jobless rate edged up to 5.4 percent, statistics agency IBGE said, from 5.3 percent in August.
Though a small monthly rise, it was the lowest rate for the month of September since the current data series was introduced in 2001, reinforcing the view that Brazil's tight labour market remains well-suited to support economic recovery soon. Low unemployment has fuelled concerns over inflation next year though, as services prices rise faster than other costs. It has also dragged on industry, which has struggled to pass on higher labour costs to a weak global market.
September's jobless rate had been expected to hold steady at 5.3 percent, according to the median forecast of 31 economists surveyed by Reuters. In the same month a year ago, Brazil's jobless rate stood at 6.0 percent. As retailers start hiring temporary workers for the Christmas shopping season, the unemployment rate may fall below its all-time low of 4.7 percent in coming months.
"Youngsters, students and even retired workers started looking for jobs as they see job opportunities," said Cimar Azeredo, who co-ordinated the survey at IBGE. "The uptick in the unemployment rate was not about job losses; it was about growing demand." Brazil, the world's sixth largest economy and home to nearly 200 million people, has relied on its vast consumer market to avoid a recession in the past year.
Robust demand is also expected to fuel an economic rebound in the coming months after heavy government and central bank stimulus, including 10 straight interest rate cuts. The IBGE report strengthened that case, even though some analysts saw signs of stabilization in the labour market. The number of Brazilians with jobs in the six major metropolitan areas surveyed rose 0.9 percent from August to 23.2 million people, up 2.3 percent from the year-ago period.
The tally of people who unsuccessfully looked for work remained stable in September from August at 1.3 million. The figure fell 8.6 percent from a year earlier. Payroll job growth also accelerated in September, the Labour Ministry said earlier this week. Real wages, or salaries discounted for inflation, rose 0.1 percent month-on-month to an average of 1,771.20 reais ($875), gaining 4.3 percent from the year-earlier month.
"High employment and elevated wages should help spur private sector consumption," wrote Gustavo Arruda, economist at BNP Paribas, in a note to clients. "On the other hand, rising wages also represent a growing cost for firms. Those who cannot pass such rising costs to final prices suffer from a profit squeeze. That is the case in industry. Those who can, hike their prices to final consumers. No wonder that service price inflation runs persistently well above headline inflation."
Yields on interest rate futures had a muted reaction to the data, though, as traders sticked to their bets that the central bank will likely keep interest rates on hold through most of 2013 despite sticky inflation to support the economy. Brazil's jobless rate has remained very low despite the recent economic slowdown, contrasting with the United States and many European countries. Spain, hit by a deep recession and a banking crisis, saw its unemployment rate soar to 24.6 percent in the second quarter.
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