Brazil’s May Job Creation Lowest for Month in Over Two DecadesMatthew Malinowski and Carla Simoes
Brazil’s formal job creation in May was the lowest for the month since 1992, as economic growth slows in the world’s second-largest emerging market.
Brazil registered 58,836 new formal jobs in May, about half the number of posts created the month prior, the Labor Ministry said today in a report distributed in Brasilia. The result was below estimates of 15 economists surveyed by Bloomberg, whose median forecast was for 88,000 new jobs.
Above-target inflation has eroded confidence and purchasing power, offsetting President Dilma Rousseff’s efforts to jump-start growth by cutting taxes and offering subsidized credit to companies. Economists cut their 2014 growth forecast to a record after first-quarter expansion slowed on the biggest drop in investments in two years.
“It’s logical that the creation of new jobs is losing strength,” Newton Rosa, chief economist at Sul America Investimentos, said by phone. “Low confidence ends up hitting activity, and then the slowdown in activity has consequences for employment.”
Latin America’s largest economy grew 0.2 percent in the first quarter, half the pace of the expansion recorded during the last three months of 2013. Investment, industry and family consumption contracted on the quarter.
Economists surveyed by the central bank expect growth to slow to 1.16 percent this year, according to the survey published on June 23. Brazil’s gross domestic product expanded a revised 2.5 percent last year.
Annual inflation in mid-June accelerated to 6.41 percent from 6.31 percent the month prior, the national statistics agency said on June 18. The central bank targets annual inflation at 4.5 percent, plus or minus two percentage points.
The government’s job creation number is a balance of posts created minus job eliminated. Registered jobs, so-called formal work, assure employees a range of benefits such as unemployment insurance, bonuses and retirement payments by the government.