Brazil’s unemployment rate fell 0.6 percentage points to 7.9 percent in the rolling quarter through July, compared with the immediately preceding three-month period between February and April, according to the Brazilian Institute of Geography and Statistics (IBGE). It is the best result for the period since 2014. In the same quarter last year, the rate was 9.1 percent.
After two quarters of decline, the number of employed people resumed growth (1.3 percent). As a result, the number of workers without a job decreased by 6.3 percent compared to the previous quarter, reaching 8.5 million people — meaning 573,000 fewer unemployed individuals. Compared to 2022, the decline was even greater, at 13.8 percent, or 1.36 million workers.
However, most of these new workers were hired informally. The informality rate, i.e. the number of people working without formal contracts, rose to 39.1 percent of employed workers, up 0.2 p.p. from the previous quarter but down 0.8 p.p. from the same period last year.
Among the activities leading the labor market expansion are public administration, defense, social security, education, human health, and social services, with 3.4 percent growth between May and July, and information, communication and financial, real estate, professional and administrative activities, with a 2.5 percent expansion.
These figures show that the Brazilian labor market is more resilient than expected at the beginning of the year. Looking ahead, economists predict stable or slightly better numbers, as historically the labor market tends to expand in the second quarter due to temporary hires to support industrial production lines and commercial sales.
On the other hand, some 5 million people who left the labor market during the pandemic have not returned to seek new opportunities. This also contributes to the decline in the overall rate, as those who are not looking for work are not included in the unemployment statistics.
Another positive aspect was the slight increase in the average monthly income of employees, which rose from BRL 2,916 (USD 592.50) in the quarter ended April, to BRL 2,935. Combined with the drop in inflation, these data reinforce economists’ expectations that household consumption has recovered to some extent in the second quarter, which will help sustain economic growth despite the slowdown in the agricultural sector — the IBGE will release GDP figures for the second quarter tomorrow.
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