Brazilian labour force shrinks in January

Brazil´s unemployment dropped at the start of the year as the economic recession led to a shrinking labour force.

The number of people looking for work decreased by 5.3% month-on-month while the number of those slipped by 0.1% in comparison to December.

Combined, that led to a drop in the seasonally adjusted unemployment rate to 7.8% from 8.2% in the month before.

That was below the reading of 8.3% forecast by Barclays´s Bruno Rovai and the 8.0% projection from the consensus.

Average real weages decreased by 1.7% month-on-month, leading to a 9.9% year-on-year reduction in the whole real wage bill, Rovai explained.

"The labor market deterioration remains visible and today’s data do not suggest the trend will be reversed; on the contrary, the decrease in active labor force and continued reduction of real wages, close to double-digit contractions, corroborates our view that household consumption will be the largest negative contribution to the real GDP contraction of 2.8% that we forecast for this year."