Brazil’s unemployment rate has reached its lowest level in a decade, dropping to 6.9% in the second quarter of June 2024. This marks a significant decline from the 7.9% recorded in the first quarter, driven by a record high number of employed individuals, reaching 101.8 million. The positive news has been welcomed by President Luiz Inacio Lula da Silva, who attributes it to the government’s efforts in creating more jobs.
However, the strong labor market has also raised concerns among policymakers regarding inflationary pressures. The central bank, citing unmoored inflation expectations, has maintained a restrictive monetary policy, keeping interest rates at 10.50%, despite the robust job market. Despite the positive signs, the central bank remains cautious about the potential for inflation, which could hamper further interest rate cuts.
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The strong labor market has also led to an increase in real wages, reaching 3,214 reais ($572) in the second quarter. This positive development bodes well for consumer spending, which could further stimulate economic growth. Experts predict a continued downward trend in unemployment in the second half of June 2024, indicating a healthy trajectory for the Brazilian economy.