Brazil's labour market deterioration continues as unemployment rate to hit 7%

The non-seasonally adjusted data shows the unemployment rate falling to 4.3% in December 2014 and rising to 6.9% through June 2015. A one-tick rise is expected in the non-adjusted unemployment rate to 7.0% in July as employment likely fell by -1.3% yoy and the labour force grew by 0.9% yoy, the seasonally-adjusted rate could jump to 6.8%. With the economy in deep recession, the average unemployment rate this year is now expected to comprehensively exceed the forecast of 6.2% (4.9% in 2014). 

The unemployment rate is expected to rise to 7.6% in 2016 and 8.7% in 2017. The rising unemployment rate should ultimately help cool wage growth to 5.2% this year and 4.1% next year compared with 10.1% in 2014. While this will help moderate inflation expectations, it will also likely be a drag on private consumption and growth.