Brazil's labour market deterioration means further downside for consumption and growth

Over the past year, Brazil's unemployment rate has risen by 2.6pp to 7.6%. The recent pace of deterioration in the labour market was slightly greater than expected despite having accounted for the contraction of the macro economy, and this could, unfortunately, ensure a far worse contraction in private consumption in 2016 than it is estimated at the moment. This would hit the economy hard, and growth could fall well short of the expectation of -0.7% in 2016. 

"The unemployment rate could also come in higher than we currently estimate: 8.9% in Q4 16; average 8.5% in 2016", notes Societe Generale.