Brazil’s Unemployment Rises More Than Forecast in January

Brazil’s unemployment rate rose more than analysts predicted in January as the world’s second-biggest emerging economy continues to respond slowly to government efforts to spur growth.

The jobless rate jumped to 5.4 percent from the record low 4.6 percent in December, the national statistics agency said in Rio de Janeiro today. Economists had forecast unemployment would rise to 5.2 percent, according to a survey by Bloomberg of 28 analysts. The January jobless rate was the lowest ever for the month.

Unemployment in 2012 reached a record average low of 5.5 percent, less than half the rate a decade earlier. Gross domestic product expanded more slowly than in all other major Latin American economies and the U.S., and the government has lowered taxes and held the benchmark Selic rate at a record low 7.25 percent. Companies, anticipating a rebound last year, maintained their workforces. Still, labor market data indicate a slight increase in unemployment in 2013, said Felipe Tamega, chief economist at Modal Asset Management.

“There is still a tight labor market, but it seems like there will be an adjustment with a little higher unemployment,” Tamega said in a telephone interview from Rio de Janeiro.

Swap rates on the contract maturing in January 2014, the most traded in Sao Paulo today, rose one basis point, or 0.01 percentage point, to 7.81 percent at 10:05 a.m. local time. The real was little changed at 1.9812 per U.S. dollar.

Labor Shortage

Companies are facing a shortage of skilled labor and not just holding idle workers idle as they wait for the next upswing, said Masao Ukon, partner and managing director at the Boston Consulting Group in Sao Paulo.

“There will be a need to increase productivity to increase output in a more significant way, otherwise we will have lower growth,” said Ukon in a telephone interview. “Productivity is key for higher economic growth in the coming years.”

Central bank president Alexandre Tombini said at an event yesterday in New York that Brazil requires productivity gains, as well as better qualification for Brazilian workers and higher rates of investment.

The statistics institute will publish fourth-quarter and full-year 2012 GDP figures on March 1. Lower investment in the fourth quarter would mark the sixth straight decline. Economists surveyed by the central bank estimated that GDP grew 0.98 percent last year, and will expand 3.1 percent in 2013.

’Less Upbeat’

“There is no reason to think the labor market will keep up this exceptional performance if we have a third year where growth, even recovering from 2012, is far from being spectacular or even very good,” said Andre Loes, chief Latin America economist at HSBC Bank Brasil SA. “At some point it has to be reflected with a little less upbeat labor market.”

Brazil’s economy created 28,900 government-registered jobs in January, the lowest for the month since 2009, following a decline in December that was the second-largest since the series began in 2003. The figures show companies are already starting to hire less, Loes said by telephone from Sao Paulo.

The trend of falling unemployment will continue, Treasury Secretary Arno Augustin said on Feb. 22.

Before it's here, it's on the Bloomberg Terminal.