Employment Indicators Point to Negative Market Perceptions in Brazil

RIO DE JANEIRO, BRAZIL – The Lagging Employment Indicator, released October 7th in Rio de Janeiro by the Brazilian Institute of Economics (IBRE) of the Getúlio Vargas Foundation (FGV), shows that the perception of the labor market in the country remains negative.

Despite an increase of 7.2 points in September to 82.0 points, the fifth consecutive month of growth, there was a deceleration in the indicator from July. According to the FGV, in quarterly rolling averages, the Lagging Employment Indicator progressed 8.4 points, to 74.3 points.

Rodolpho Tobler, economist at FGV/IBRE, explains that the September high brought the Lagging Employment Indicator closer to pre-pandemic levels, which were not very high, according to the historical series. The indicator’s peak occurred in March 2018, standing above 105 points. In March 2020 there was a sharp drop, to less than 45.

“For the coming months, we can still see factors that may add risks to the viability of recovery, such as high uncertainty and the end of government support programs in this pandemic period,” he noted.

The Coincident Unemployment Indicator remained stable in September, at 96.4 points. According to IBRE/FGV, it has a similar pattern to the unemployment rate, with a lower number pointing to a better result.

In quarterly rolling averages, the Coincident Unemployment Indicator dropped 0.3 points to 96.7 points. The indicator has remained at this level, with little variation, since September 2015. Until March 2014, the Coincident Unemployment Indicator stood at a range of 65 points.

Tobler also states that the result for the month shows a negative perception. “The September result still shows that there is a negative perception about the labor market. Despite the timid reduction in the margin, the high level shows that there is a long road towards recovery,” he said.

All of the Lagging Employment Indicator’s seven components are still on the rise, as in the two preceding analyses, albeit at a slower pace. The highlight of the month was the Business Tendency Industry indicator, which rose 16.2 points, to 117.4 points.

All indicators grew less when compared to the preceding month, except for the Future Employment and Projected Employment Service indicators.

With respect to the Coincident Unemployment Indicator, the drop occurred only for families with monthly income between R$2,100 and R$4,800. The current Local Employment indicator for this range rose 1.9 points in the margin.

The Lagging Employment Indicator combines data series extracted from the Industry, Services and Consumer Surveys, with the purpose of forecasting the paths of the labor market in the country. The Coincident Unemployment Indicator uses data broken down into four family income classes from the Consumer Survey to gauge the perception of the current labor market situation.

Source: Agência Brasil