Brazilian job creation cools off in October

The Brazilian economy added almost 160,000 new jobs in the formal sector in October, data by the Labor Ministry shows. The job creation report underperformed expectations, as consensus expected 238,000 net jobs to be created. It was the second-worst figure of the year, only higher than March (97,000).

Once again, formal job creation in October was driven by the services sector, with 91,300 new posts, retail (49,400), and industry (15,000). Agriculture was the only segment that lost positions last month, slashing almost 1,500 jobs. 

In addition to lower-than-expected job creation, admission wages dropped for the second consecutive month. With a 0.38-percent decrease compared with September, the average worker’s income in October was BRL 1,932 (USD 364).

Since the beginning of the second semester, the labor market in Brazil has been showing some improvements, with workers’ income increasing, even if marginally. Between June and August, for example, the average entry-level wage of a formal job saw a 1.5-percent bump, reaching BRL 1,950.  

Per specialists, this improvement is due to a combination of the complete reopening of the economy after the pandemic, which increases the number of jobs available, and the recent slowdown in inflation in the country. Nevertheless, this trend was already expected to be short-lived.

Muted forecasts for the labor market and an expected slowdown in GDP growth next year point to a deceleration in the increase in average income. Meanwhile, after three months of deflation, the IPCA consumer price index went up again in October.