Jobless rate in Brazil likely to have deteriorated further in June

Brazil’s jobless rate is expected to have continued to rise in June. According to a Societe Generale research report, the IBGE’s PNAD survey is expected to show that the jobless rate rose to 11.5 percent in June from May’s 11.2 percent and slightly lower than 9 percent at the beginning of 2016. In the brief history of this series, the jobless rate had bottomed at the end of 2013 at 6.2 percent and 6.5 percent in late 2014 before deteriorating to present levels.

Meanwhile, the PME survey, in spite of its different level, has also indicated that the jobless rate is almost the double the figure from the late 2014 level. The new survey also indicates that employment is dropping at an annual rate of 1.5 percent in the past three months, noted Societe Generale. Givern that the Brazilian economy continues to be in deep recession and that the business sentiment is also low, the weakness in labor market is consistent with expectations.

Additional worsening of labor market might be a serious challenge for consumption demand and growth. Admittedly, even if growth in investment is likely to bottom in 2017, subdued consumption would keep the Brazilian economy from expanding. Deterioration in the labor market is likely to continue in the next two years, stated Societe Generale.