Brazil's Unemployment Rate Unexpectedly Drops in November

  • Joblessness has historically dropped in advance of holidays
  • Quickening inflation continued to erode wages last month

Brazil’s unemployment rate dropped in November, surprising analysts who forecast joblessness would continue to climb amid the deepest recession in 25 years.

The jobless rate fell to 7.5 percent last month from 7.9 percent in October, the national statistics institute said Thursday. That compares with a median estimate of 8 percent in a Bloomberg survey of 37 analysts.

This is the second indicator in two days that surprised analysts positively. Retail sales unexpectedly rose in October from the month before, a report showed on Wednesday. The improvement in indicators comes as Brazil was cut to junk by a second major ratings firm this year. Joblessness had been rising since the start of the year, hurting both consumer confidence and spending in Latin America’s largest economy.

The drop in November was seasonal, as companies and stores hire workers in advance of year-end holidays, according to Flavio Serrano, senior economist at Haitong in Sao Paulo. Since 2001, the unemployment rate has only increased three times in the month of November.

“We don’t have to take this figure as quite so important, because it doesn’t change our minds in terms of the situation,” Serrano said by phone. “Unemployment rate is likely to keep climbing over at least 2016.”

Swap rates on the contract due in January 2017 fell 18 basis points to 15.86 percent at 10:21 a.m. local time. The real weakened 0.71 percent to 3.9119 per U.S. dollar.

With inflation and joblessness weighing on Brazilians’ purchasing power, retail sales fell for eight straight months through September before rebounding the following month. Consumer confidence as measured by the Getulio Vargas Foundation also bounced back in November from its lowest recorded level since the survey began a decade ago.

Inflation, which quickened to 10.48 percent in the 12 months through November, has eroded real wages by 8.8 percent from the same month last year, the statistics agency said. The 3.7 percent decline in the employed population from the same month last year was the largest drop in the series’ history, according to Thais Zara, chief economist at Rosenberg Consultores Associados.

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