The jobless rate in Brazil slightly exceeded expectations in the final quarter of 2024 but still achieved its lowest annual average since data collection began in 2012, underscoring the labor market's sustained strength across the year.
According to the Brazilian Institute of Geography and Statistics (IBGE), unemployment in the country rose to 6.2% in the three months ending in December, up from 6.1% in the previous quarter and surpassing the 6.1% projected in a Reuters economist poll.
Despite the fourth-quarter uptick, the 2024 average unemployment rate stood at 6.6%, the lowest recorded since 2012. This consistent low level has pleased the government but prompted the central bank to raise interest rates.
C6 Bank economist Claudia Moreno predicts that Brazil will likely maintain an unemployment rate around 6% throughout this year and the next, emphasizing that this remains historically low and supports robust economic growth.
However, the strong job market, characterized by high wages, has fueled consumption but also raised inflation concerns, as consumer prices persist above the central bank's 3% target.
The Central Bank recently increased rates by 100 basis points to 13.25% and indicated a similar hike could follow in March, signaling a possible series of subsequent adjustments.
Despite the recent data on job creation and minor deviation in unemployment rates, analysts like Galapagos Capital’s Tatiana Pinheiro believe it is premature to anticipate major labor market slowdowns that could alleviate inflation pressures. She forecasts an accelerated monetary policy tightening, proposing successive rate hikes in the coming months up to 15%.