Brazil’s Jobless Rate at Decade Low

SAO PAULO (Reuters) – Brazil’s jobless rate remained at its lowest level in a decade in the three months through June. Data from the statistics agency IBGE showed that the number of employed people in Latin America’s largest economy reached an all-time high.

The unemployment rate in Brazil stood at 6.9% in the April-June period, according to IBGE. This figure met market expectations and was down from 7.9% in the previous quarter, marking the lowest for that period since 2014.

Despite elevated interest rates, Brazil’s jobless rate has remained around historically low levels for the past year, a development that has been welcomed by the government, even as some express concerns that it might lead to inflationary pressures.

“Great news, but no surprises,” President Luiz Inacio Lula da Silva said on X after the latest figures were released. “Our work continues to yield results, creating more jobs for Brazilians.”

Central bank policymakers have warned that a strong labor market could drive higher services inflation, reducing the likelihood of interest rate cuts. Last month, the bank halted an easing cycle that had gradually lowered its benchmark Selic rate to 10.50% from a six-year high of 13.75%, citing unchecked inflation expectations. A standstill is widely expected again later on Wednesday.

Rafaela Vitoria, chief economist at lender Inter, remarked, “The Selic rate is still restrictive enough for the current inflation levels, but new pressures could mean that monetary policy should remain restrictive for longer.”

According to IBGE, the number of unemployed people in Brazil was 7.5 million in the April-June period, which is a 12.5% decrease quarter-on-quarter. Meanwhile, employed citizens totaled 101.8 million, the highest ever recorded since the data series began in 2012.

Average real wages increased by 1.8% in the quarter, reaching 3,214 reais ($572), based on statistics from the agency.

Earlier this week, government data indicated Brazil created more formal jobs than expected in June. Itau economists noted, “With the significant decline in unemployment throughout the first half, we now have a downward bias for our jobless rate projection at the end of the year.” Today’s data confirm that the job market remains tight.

($1 = 5.6218 reais)