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Brazilian labor market posts strong Q3

Jobs and unemployment reports released this week bring a series of good news to Brazil’s labor market. Job creation remained robust (notably among formal positions), the unemployment rate fell to match a seven-year low, and real wages soared.

Unemployment measured by IBGE, Brazil’s official statistics agency, ended Q3 at 8.7 percent — down from 9.3 percent at the end of the previous quarter. The portion of the workforce out of a job is now at 9.5 million people, the lowest since December 2015 and almost 30 percent below what it was at the turn of the year.

The job market continues to benefit from the end of Covid restrictions, pushed by retail and services. And although the informality rate remains sky-high at 39.4 percent, it is 1.2 percentage points lower than a year prior.

Q3 also marked the first time since June 2020 that workers’ usual monthly real income grew both quarter on quarter and year on year (3.7 and 2.5 percent, respectively). The measure reached BRL 2,737 (USD 514) in September. The growth is also a reflection of a receding inflation rate, which now stands at 7.17 percent in 12 months (against 11.89 percent at the end of Q2).

On Wednesday, the Labor Ministry published data on formal job creation, which brought some mixed signals.

While the economy added 278.00 new formal jobs in September — almost 2 jobs streak expected by the market — the average entry-level wage in September dropped by 0.64 percent to BRL 1.931, interrupting a three-month growth.

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