The Leading Employment Indicator (IAEmp) of FGV’s Brazilian Institute of Economics (IBRE) dropped 2.4 points in June, down to 96.9 points. After the second consecutive drop, the quarterly moving average indicator fell for the first time in the year (down 1.2 points), indicating a slower job market recovery.

“The drop in the leading employment indicator shows that the increased economic uncertainty has lowered expectations regarding future hiring, illustrated by the weaker hiring intention within the industry for the next three months. The indicator’s high level, however, still reflects some optimism towards the future,” said Fernando de Holanda Barbosa Filho, IBRE economist.

In turn, the Coincident Unemployment Indicator (ICD) fell 0.7 point in June, down to 96.6 points. The indicator has already dropped 7.0 points in the year.

“The ICD’s slump is consistent with the recent drops in the employment rate, indicating that the job market had reached rock bottom. Obviously, a possible loss in governance from the government could reverse this trend,” said Fernando de Holanda Barbosa Filho. 

Five of IAEmp’s seven components showed negative variations in June. The top contributor to such downturn was the indicator that reflects the industry’s hiring intention in the next three months, recording a variation of -10.3 points over the previous month. The second largest contributor was the indicator that gauges expectations surrounding business trends in the service segment in the next six months, falling 6.8 points in the margin.

The income classes that most contributed to the ICD’s decline were the bottom two classes: consumers with household income of up to BRL 2,100.00, whose Employment Indicator (inverted) varied -3.6 points; and the income range of BRL 2,100.00 to BRL 4,800.00, which fell 2.4 points.

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