Brazil’s Job market: Leading Indicator of Employment falls back
Economics
11 June 2018

Brazil’s Job market: Leading Indicator of Employment falls back

Six of the Leading Indicator of Employment’s seven components showed negative variations in May.

The Leading Indicator of Employment (LIEmp), calculated by FGV’s Brazilian Institute of Economics (IBRE), dropped 2.5 points between April and May, down to 101.1 points. This is the indicator’s third consecutive decrease, which had not happened since early 2015. The indicator’s quarterly moving averages also show a downward trend, dropping 2.9 points over the previous month.

“The latest data on Brazil’s economy were surprisingly underwhelming. The country’s growth rate is being revised downward, which directly affects employment. Within this scenario, LIEmp results translate the perception that both the business situation and the willingness to hire tend to be lower over the next few months”, said IBRE economist Fernando de Holanda Barbosa Filho.

The Coincident Indicator of Unemployment (CIU) rose 2.3 points between April and May, reaching 96.5 points – offsetting the 2-point drop seen in the previous month.

“The weaker optimism regarding the economy’s recovery in 2018 is already affecting the workers’ perception regarding improvement in the job market. The CIU shows that workers are still unsure about the future, despite the (slight) drop in the unemployment rate”, said Fernando de Holanda Barbosa Filho.

Six of LIEmp’s seven components showed negative variations in May. The main drivers behind the LIEmp drop were the indicators that measure the business situation in the next six months in the Services and Processing Industry sectors, which varied -6.2 and -5.4 points on the margin, respectively.

The income classes that most contributed to the CIU’s increase were the bottom two classes: consumers with household income of up to BRL 2,100.00, whose Employment Indicator (inverted) rose 4.0 points; and the income range of BRL 2,100.00 to BRL 4,800.00, which varied 4.3 points.

The complete results are available on the website.