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Unemployment is expected to continue to fall until the end of the year, experts say

The drop in the unemployment rate in Brazil, which was 9.1% in the quarter ended in July, was slightly less pronounced than expected by the market consensus of 9%. But economists point out that the result is positive, as it indicates a heated economy and a slowing unemployment, which should continue to fall until the end of 2022.

To CNN Brasil Business the senior researcher in the area of ​​Applied Economics at FGV IBRE Fernando Barbosa Filho highlighted that the job market should continue to be strong in the coming months, with the generation of formal jobs having helped to strengthen the economy.

“Because of the very strong fiscal, it is expected that unemployment will continue to fall until the end of the year, with a strong job market in the coming months”, he said.

“Wage pressure rises again with the warmer market. It’s not possible to talk about a trend, because last year we still had a weakness, when making a monthly comparison, but this month we already have an acceleration. The real rise in wages is a sign that the market is getting warmer,” he added.

Although formal jobs have helped in the recovery of the labor market, according to Fernando, informal jobs grew by 0.3% between June and July, marking the sixth consecutive positive reading. The economist points out that the balance is favorable, when considering the positive surprises that the indicators have shown throughout this year.

For Rodolfo Margato, economist at XP, the creation of informal jobs was the highlight of the Pnad Contínua (Continuous National Household Sample Survey), released this Wednesday (31).

“The category of ’employees in the public sector without a formal contract’ was the highlight with a rise of 3.5% in the monthly comparison. In this way, total informal employment jumped to 42.4 million in July, from 42.2 million in June and 40.7 million at the beginning of 2020. Meanwhile, formal employment increased by 0.4% between June and July , cooling down from the 0.8% jump in the previous reading”, he pointed out.

“In the margin of this month we had a little more informal job creation, but in the year as a whole we observed the creation of many formal jobs, which is a surprise, because the historical trend in Brazil is, in fact, in the category without a formal contract. signed”, added Fernando Barbosa Filho.

Another highlight in the opinion of experts was the increase in the average real income, which rose 1.0% in July compared to June, the third consecutive monthly increase. According to Rodolfo Margato, real yields will continue with a moderate upward trend going forward.

Claudia Moreno, economist at C6 Bank, pointed out that the average real income of the worker rose to R$ 2,693 in the quarter, “but it remains at a very depressed level”. Already the mass of real income has been registering strong expansion and is already close to the pre-pandemic level, according to her, with a high of 1.6% compared to the quarter ended in June.

As exposed by experts, unemployment should continue to fall and could end up below 9%. “Our expectation is that the unemployment rate will continue to fall until the end of the year, reaching 8.7%, as a delayed effect of the economic recovery”, said Claudia. Rodolfo Margato stated that the expectation is that the level ends at 9.0%, despite confirming that the projection has a “bearish bias”.

Source: CNN Brasil

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