Fundação Getulio Vargas’ Leading Indicator of Employment (LIEmp) fell 2.2 points in January, to 83.5 points. In three-month moving averages, LIEmp halted the upward trend begun in July 2020, slipping 0.5 points to 84.5 points.

“The decline in LIEmp in January suggests a slowdown in the labor market recovery. In the last few months, the indicator had been fluctuating below the level observed in the period before the pandemic. Because of the probable deceleration of economic activity in the first quarter and the high level of uncertainty, we cannot yet imagine an improvement in this indicator in the short term,” says Rodolpho Tobler, an economist at FGV IBRE.

The Coincident Indicator of Unemployment (CIU) fell 3.8 points, to 98.8 points. CIU is an indicator that is similar to the unemployment rate, in that the lower the number, the better the result. In terms of three-month moving averages, there was a rise of 0.8 points, to 100.3 points, the highest level since March 2017 (101.3 points). 

“After four months, CIU has fallen again, but we need to be cautious about this result, because it is still very high. The next results may confirm whether the trend has reversed, but the end of government emergency welfare programs, some sectors’ weak recoveries and the deterioration of the pandemic figures do not suggest positive expectations for the coming months” Tobler says.

Highlights of LIEmp and CIU

Of LIEmp’s seven components, five decreased in January, most notably the indicators that reflect the current situation in the industry and service sectors, which fell 8.3 and 6.9 points in the month, respectively. Another major indicator that contributed to LIEmp’s result was the consumers’ future local employment indicator, which declined 6.0 points in January.

Over the same period, CIU worsened in all four household income groups. For the second time in a row, but in the opposite direction, the biggest contribution to the result came from households earning between R$4,800 and R$9,600 per month, whose current local employment indicator (inverted) fell 5.4 points at the margin.