Brazil's labor market look beyond stability of unemployment rate

Brazil's unemployment rate for September came in slightly lower than expected, at 7.6%, implying 2.7pp deterioration from a year ago. In seasonally adjusted terms, the unemployment rate was flat at 7.5%.

Adjusted for seasonality, employment of the economy continued to move down (-0.2% m/m sa), reaching the level of more than three years ago. This movement, however, was accompanied by a decrease in unemployed people (by -0.2% m/m sa as well), explaining the stability of the unemployment rate. 

Real wages have fallen by 4.3% in September, leading the real wage bill to decrease by 6.1% y/y and accumulating a 3.6% contraction year-to-date. This is the worst result of the historical series for this survey.

"Overall, 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% fall in private consumption this year", says Barclays.