Economic brake in the 4th quarter affects new formal jobs, assess economists

The Caged (General Register of Employed and Unemployed) for October pointed to the net creation of 159.5 thousand new jobs, a slowdown compared to the 277.39 thousand registered in the previous month. The number also fell short of market expectations, which expected 210,000 new jobs.

For economists consulted by CNN Brasil Business, the scenario reflects a slowdown in the economy at the beginning of the fourth quarter, according to analysts consulted by CNN Brazil Business 🇧🇷

“This slowdown shows a weaker economy and the effect of higher interest rates on consumption”, says Bruno Imaizumi, from LCA Investimentos. According to the expert, the prospects for job creation calculated by the Getúlio Vargas Foundation also show a slowdown for new vacancies in November.

Another point mentioned by the LCA economist is in relation to government stimuli that are starting to run out. The extraordinary withdrawal of the FGTS, the anticipation of the 13th salary, the reduction of the water scarcity tariff flag and the tax relief that occurred in fuels, electricity, communication and public transport via PLP 18/2022, are beginning to come to an end.

“The PEC on Fuels, the expansion of the Auxílio Brasil from R$ 400.00 to R$ 600.00, the expansion of Vale-Gás, aid for truck drivers and taxi drivers, modification in the reimbursement of ethanol to the states and compensation to the states in transport for the elderly leave the hands of the beneficiaries”, says Imaizumi

Another data that indicates the deceleration is the real average admission salary, which retreated from September to October by 0.38%, to R$ 1,932.93. In comparison with the same month of the previous year, the value shows advance of 1.19%.

“Net creation in October already shows a certain loss of momentum at the opening of the fourth quarter, compared to previous months”, says Eduardo Vilarim, Economist at Original. The expert points out, however, that the result is still above the average computed for the month since 2007 [121 mil vagas]which “contributes to our projection of 2 million formal jobs created in 2022”, he says.

Sectors

The positive result for the month was disseminated by the groups of economic activities monitored by the government in the month, but the deceleration is more concentrated in “general industry”, according to Étore Sanchez, chief economist at Ativa Investimentos, who showed declines “well beyond what was suggested by the seasonally adjusted for that year”.

The specialist says, however, that the scenario “does not drastically change the good result of the formal labor market this year, which should end with the creation of more than 2.2 million net jobs”.

Bruno Imaizumi, from LCA Investimentos, highlights the sharp decline in the agriculture, industry and construction sectors. The latter, according to him, had been generating vacancies since the beginning of the new Caged measurement, which started in January 2020 – excluding the pandemic months and the months of December, as they tend to have stronger shutdowns.

“October 2022 was the worst month since New Caged started. To get an idea, the month saw the creation of 3,700 construction jobs. If we compare every month of this year, since January, there was an average of 32,000 new jobs per month in the sector”, he points out.

Trade also recorded a slowdown compared to the previous month, but remains at a high level, benefiting from the economic reopening.

“The service sector also had a strong slowdown, mainly in information, communication, accommodation, food, transport and storage. On the other hand, the sectors that demand a more specialized workforce, as in the case of technology, had positive results and held the index numbers”, he explains.