Bloomberg News

Brazil April Unemployment Drops Below All Analyst Estimates (1)

May 22, 2014

Brazil’s unemployment rate unexpectedly fell to its lowest level in three months in April as the labor force shrank.

The jobless rate decreased to 4.9 percent from 5 percent in March, the national statistics agency said in Rio de Janeiro today. That was lower than forecast by all 34 economists surveyed by Bloomberg, whose median estimate was 5.2 percent.

Unemployment has persisted near record lows, stimulating demand while fueling consumer prices. The central bank has responded with nine straight interest rate increases that its President Alexandre Tombini said on May 6 have a delayed impact on inflation. While today’s data shows the labor market is “tight,” it’s probably not enough to convince policy makers to persist with rate increases, economist David Rees said.

“It’s a pretty minimal change,” Rees, an emerging markets economist at Capital Economics Ltd, said by telephone from London. “It’s not impossible that they might lose their confidence a little bit if there’s another strong inflation number and get another small hike in, but we think tightening is pretty much done.”

Swap rates on the contract maturing in January 2017, the most traded in Sao Paulo today, fell 6 basis points, or 0.06 percentage point, to 11.85 percent at 9:42 a.m. local time. The real appreciated by less than 0.1 percent to 2.2054 per U.S. dollar.

Selic Rate

Policy makers have lifted the benchmark Selic (BZSTSETA) rate to 11 percent from 7.25 percent in April 2013. Thirty out of 35 analysts surveyed by Bloomberg expect policy makers to keep borrowing costs unchanged at their meeting on May 27 and 28, as the economy shows signs of slowing.

Average real income in Brazil fell 0.6 percent in April from the previous month to 2,028 reais ($920), the statistics agency said. The labor force narrowed by 0.1 percent to 24.1 million.

Consumer prices rose 0.58 percent in mid-May from the previous month, the smallest increase in half a year, the statistics institute reported yesterday. It is scheduled to publish inflation data for the full month on June 6.

Brazil’s economy will grow 1.8 percent this year, down from 2.3 percent in 2013 and nearly half a percentage point shy of the Latin American average, according to analysts polled by Bloomberg.

The unemployment survey evaluates the job market in six metropolitan areas and is scheduled to be replaced by a nationwide survey in 2015.

To contact the reporters on this story: David Biller in Rio de Janeiro at; Peter Millard in Rio de Janeiro at

To contact the editors responsible for this story: Andre Soliani at Randall Woods, Philip Sanders

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