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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Brazil to make it easier for foreign workers to meet country’s labor market demands

January 17, 2014

The Associated Press, 1/16/2014

Brazil will change its immigration law to make it easier for foreign workers to enter the country and meet growing demands for labor, Strategic Affairs Minister Marcelo Neri said Thursday.

He said the country wants professionals from countries with “linguistic affinities” with Brazil, such as Spain, Portugal, Italy and countries in Latin America.

Foreign workers are needed because the current “situation of near-full employment” could jeopardize the country’s future economic growth, he added. The unemployment rate in November 201

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Brazil’s October jobless rate hits lowest in 10 months

November 21, 2013

Silvio Cascione – Reuters, 11/21/2013

Brazil’s jobless rate in October dropped to its lowest this year, suggesting a tight labor market could support consumption and help the economy fend off a recession.

Brazil’s jobless rate fell to 5.2 percent in October from 5.4 percent in September, government statistics agency IBGE said. That was the lowest rate since December 2012, when it reached a record low.

The number was slightly lower than the median forecast of 5.3 percent in a poll of 25 economists. In October last year, Brazil’s jobless rate stood at 5.3 percent.

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Three signs Brazil could be awakening from its economic slumber

September 23, 2013

Roberto A. Ferdman – Quartz, 09/23/2013

Brazil’s plummeting currency and rising consumer prices have been making life difficult for its businesses and citizens, and prolonging its economic funk. But there a signs of gradual improvement.

Here are three recent trends in Latin America’s largest economy worth celebrating:

1. Inflation is finally cooling off a bit

2. Brazil’s currency is getting stronger

3. Brazil is creating jobs again

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Brazil jobless rate falls for first time this year

August 22, 2013

Reuters, 08/22/2013

Brazil’s unemployment rate fell in July for the first time this year, though a decline in real wages and a sharp drop in new job creation may help keep its impact on inflation at bay.

Government data released on Thursday showed the jobless rate fell to 5.6 percent from 6.0 percent in June.

The number was lower than the median forecast of 5.8 percent in a Reuters survey of 21 economists, whose estimates ranged from 5.6 to 6.5 percent.

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