Brazil September Unemployment Unexpectedly Remains Unchangedby
Inflation, higher joblessness this year have eroded confidence
Economy forecast to post back-to-back years of recession
Brazil’s unemployment rate unexpectedly remained unchanged, as the central bank maintains interest rates at a nine-year high in the face of recession. Swap rates fell.
The jobless rate remained at 7.6 percent in September, the national statistics institute said Thursday. That compares with a median estimate of 7.8 percent in a Bloomberg survey of 37 analysts.
“We thought the labor force would increase. Since that didn’t happen, the unemployment rate stabilized,” said Carlos Kawall, chief economist at Banco Safra. “When you look at the employed population, it dropped once more, so there are fewer jobs in the economy.”
As joblessness has jumped from 5.3 percent in January, and inflation continues to slice into purchasing power, consumers who have been the engine of growth for Brazil’s economy are losing confidence. Latin America’s largest economy is on track for back-to-back years of recession, and the central bank is refraining from loosening monetary policy to stimulate demand. Even President Dilma Rousseff is battling to keep her job amid impeachment requests.
Swap rates on the contract due in January 2017 fell 19 basis points, or 0.19 percentage point, to 15.19 percent at 9:59 a.m. local time. The real weakened 0.2 percent to 3.9469 per U.S. dollar.
The acceleration of inflation, to 9.49 percent in the 12 months through September, helped erode real wages by 4.3 percent from the same month last year, the statistics agency said. The central bank on Wednesday left the benchmark interest rate unchanged at its highest level since 2006 to slow price increases.
With inflation and joblessness weighing on Brazilians, retail sales have fallen for seven straight months. Consumer confidence as measured by the Getulio Vargas Foundation is at its lowest since the survey began a decade ago.
“Despite the stability on the unemployment rate, labor market dynamics continue to deteriorate, with the decrease in employment and wages corroborating our expectation of a 4.0 percent fall in private consumption this year,” Bruno Rovai, Brazil economist at Barclays Plc, said in a note.