September 28, 2018 / 12:52 PM / 3 months ago

UPDATE 1-Brazil Aug jobless rate dips as labor market recovery continues

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By Bruno Federowski

BRASILIA, Sept 28 (Reuters) - Unemployment in Brazil fell slightly more than expected in the three months through August, extending a slow-and-steady labor market recovery ahead of pivotal presidential elections.

The jobless rate slipped to 12.1 percent from 12.7 percent in the quarter ended in May, government statistics agency IBGE said on Friday. Economists polled by Reuters had expected a 12.2 percent reading.

The results suggest the outlook for a slow decline in unemployment, which reached an all-time high last year, remains intact as Latin America’s largest economy bounces back from its deepest recession in decades.

Record-low interest rates have spurred household spending, helping to drive some back into the labor force. Yet off-the-books jobs, which provide fewer benefits, accounted for nearly all employment gains so far, keeping a lid on wage gains.

When adjusted for inflation, wages remained flat both from the quarter ending in May and from a year ago, IBGE said, suggesting it is unlikely that lower unemployment will generate meaningful price pressures.

The central bank last week kept rates on hold and said it could gradually hike them if the inflation outlook worsens, in a hat-tip to the Brazilian real’s recent selloff to near its weakest ever. (Reporting by Bruno Federowski; Editing by Andrea Ricci)

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