Brazil’s labor market deterioration likely to continue in next several quarters, says Societe Generale

Brazil is expected to have recorded a declining participation rate and employment rate in November. In spite of a sharper rate of employment decline in the third quarter and in October, the jobless rate had steadied at around 11.8 percent because of a sustained fall in the labor force participation rate. Currently, the labor force is expanding at a rate of 0.56 percent year-on-year as compared with 2 percent seen in May 2016.

The current pace of labor force growth and the trend decline in employment imply that the jobless rate dropped to 12 percent in November. The jobless rate has increased by 3 percentage points in the past year and by 5.5 percentage points since 2014 when the deep recession began taking its toll on the labor market, noted Societe Generale in a research report.

Recent figures have indicated that growth in labor force has returned to the average level seen in 2012-2014, while the rate of job losses has accelerated. Given the continued growth weakness, the labor market deterioration is likely to continue in the next many quarters, according to Societe Generale. In the meantime, rising jobless rate is bound to maintain the prospect of a consumption led growth revival at bay.