For Labor Market, Brazil Becomes China

September 26, 2014

Kenneth Rapoza – Forbes, 9/25/2014

The unemployment rate in Rio de Janeiro state, home to 16.5 million people, is just 3%. It’s never been so low. It’s almost as if Brazil has developed some sort of China-style full-employment policy. On a national level, unemployment is just 5%. By comparison, China’s official unemployment rate is a little over 4%.

When it comes to unemployment statistics, Brazil has become China.

Brazil’s economy is slowing. It entered into a technical recession in the second quarter, defined by back-to-back quarters of economic contraction. China’s economy is slowing, with Barclays Capital economist Jian Chang in Hong Kong expecting Beijing to lower its official GDP target to 7% instead of 7.5%. Yet, miraculously, unemployment is just 4.1%, unchanged year over year.

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Family Saga Shows Brazil Student Funds Curb Joblessness

August 28, 2014

Matthew Malinowski and Anna Edgerton – Bloomberg News, 8/27/2014

Francisco Melo started working at age seven to help feed his 10 brothers and sisters on a Brazilian farm and went to school for only a few days. Jefferson, his 17-year-old son, never worked and attends technical school.

Their saga ties in with the story of 11 million Brazilians who gained access to higher education through state-funded initiatives in the past decade. It’s behind the longest contraction in Brazil’s labor force in at least 12 years, explaining how the unemployment rate is at a record low under President Dilma Rousseff even as job creation slows.

Programs that provide free work training, scholarships and subsidized student loans are buoying Rousseff’s campaign as she runs for re-election in October after delivering the slowest growth of any Brazilian president in more than two decades. The initiatives are creating a windfall for education providers and are shielding Rousseff from attacks that her economic stewardship has failed as rivals creep up in polls.

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Where is unemployment headed?

March 4, 2014

Ilan Goldfajn – O Estado de S. Paulo, 3/4/2014

It is uncommon to have low unemployment rates in a weak economy. In general, the slowdown of the economy affects the labor market, at least after a certain period. However, in recent years, Brazil’s GDP has grown around 2% percent, while unemployment rates continued to fall to 5 % percent. This is important. After all, unemployment has a unique relevance for society. In the economy, it affects purchasing power and consumption, as well as production. Hence, unemployment is crucial for politics, for it can decide an election. But what explains this paradox between economic growth and unemployment, and what are the consequences for the economy?

According to Ilan Goldfajn, chief economist at Itaú Unibanco, one important factor to explain this phenomenon in Brazil is demographic changes, along with a declined rate of youth participating in the economy.

To read original article in Portuguese, click here.

Brazil January jobless rate below all economist forecasts

February 20, 2014

David Biller – Bloomberg, 2/20/2014

Brazil’s unemployment rate in January was lower than all estimates from economists surveyed by Bloomberg, as the labor market remained strong amid rising interest rates.

The jobless rate rose to 4.8 percent from 4.3 percent in December, the national statistics agency said in Rio de Janeiro today. That was lower than forecast by all 37 economists surveyed by Bloomberg, whose median estimate was 5.1 percent. Adjusted for seasonality, the January jobless rate fell from December and was the lowest on record, according to Carlos Kawall, chief economist at Banco J. Safra in Sao Paulo.

Unemployment in the world’s second-largest emerging market ended 2013 at a record low, helping boost consumer demand that in turn stoked above-target inflation. Central bank President Alexandre Tombini has responded by boosting benchmark borrowing costs in seven straight meetings while introducing measures to stem a decline in the real that threatens to increase import prices.

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Brazil’s unemployment rate hits record low

January 30, 2014

Kenneth Rapoza – Forbes, 1/30/2014

Brazil’s stock market is losing billions and GDP growth is slower than that of the U.S., but the labor market is the hottest thing going.

The unemployment rate fell to a record low 4.3% in December from an already low 4.6% in November. This marks the lowest since the current version of the Brazilian unemployment rate was first reported in 2002. A comparison with the pre-2002 unemployment rate index suggests this is the tightest labor market since at least 1980.

Despite real GDP growth of only about 2.5% last year — which was actually better than expected — the Brazilian labor market is overheating, says Bill Adams, senior international economist for PNC Financial Services in Pittsburgh.

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The mirage behind Brazil’s economic miracle

January 24, 2014

Megan McArdle – Bloomberg, 1/23/2014

Joe Nocera discusses Brazil’s approach to economic development in his most recent New York Times column:

“What I saw was no illusion. Though its starting point was quite extreme, Brazil is a country that has seen income inequality drop over the last decade.Unemployment is at near record lows. And the growth of the middle class is quite stunning. By most estimates, upward of 40 million people have been pulled out of poverty in the last decade; extreme poverty, says the government, has been reduced by 89 percent. Per capita income has continued to grow even as G.D.P. growth has slowed.

“Nevertheless, the economists I spoke to were uniformly bearish about the short-term future of the Brazilian economy. They pointed, for starters, to that slowdown in G.D.P., which they didn’t expect to pick up anytime soon. Despite the country’s enormous economic gains since the beginning of this century, there has been very little accompanying productivity gains. Indeed, several economists told me that the main reason unemployment was so low was that the economy was terribly inefficient. …

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Brazil last year created least jobs since 2003 as economy slowed

January 22, 2014

Carla Simoes – Bloomberg, 1/21/2014

Brazil’s economy created the fewest jobs since 2003 last year as government subsidies designed to stimulate consumption and industrial production failed to prevent the economy from shrinking in the third quarter.

Brazil created 730,687 jobs, down from 868,241 the year before, the Labor Ministry said in a report today. The economy shed 449,444 jobs last month as employers from manufacturing to retailing fired workers. The median estimate of 13 analysts polled by Bloomberg was for 473,000 people to lose their job in December.

The economy shrank in the third quarter for the first time since 2009 on a drop in investment, even after the state cut taxes on payrolls and consumer goods to boost consumption. Analysts polled by Bloomberg forecast Dilma Rousseff will deliver the slowest growth of any president in more than two decades when her first term ends this year.

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