Brazil formal job elimination shows no reversal

In Brazil, sector-wise, the commerce sector accumulates the largest job elimination, but is now followed by the processing industry and the civil construction sectors.

July 18 report provides another piece of information on the marked deterioration of the labor market. Not only is unemployment increasing, but the wage dynamics suggest that household disposable income will decrease this year, leading to a contraction of consumption GDP.

"In terms of monetary policy, this is another data point weighting on the fairly weak growth outlook. Still, the lower-than-expected monthly GDP proxy released earlier today  reduces the likelihood of any rate hike in September, whereas for July we continue to forecast a 50bp increase given the very timid move in inflation expectations and the recent upside surprises in current inflation", says Barclays.