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UPDATE 1-Off-the-books job gains push Brazil unemployment rate to 2017 low
November 30, 2017 / 12:07 PM / 16 days ago

UPDATE 1-Off-the-books job gains push Brazil unemployment rate to 2017 low

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By Bruno Federowski

SAO PAULO, Nov 30 (Reuters) - Rising off-the-books employment push Brazil’s jobless rate to a 10-month low in the three months through October, suggesting a gradual labor market recovery that is unlikely to lift inflation.

The unemployment rate fell to 12.2 percent, in line with the median forecast in a Reuters poll of economists, state statistics agency IBGE said on Thursday, based on a household survey. It was the seventh straight monthly decline.

That is a sharp improvement from the 13.7 percent rate seen in March, after the deepest recession in over 100 years raised the unemployment rate to all-time highs.

Signs of growing strength in the labor market are welcome as the economy continues to pick up steam. Still, a months-long surge in off-the-books, informal jobs accounted for all of the gains, with formal employment still stagnant.

“People are looking for domestic labor, mostly off-the-books, amid a lack of space in the formal sector,” IBGE economist Cimar Azeredo said.

Informal workers avoid a heavy tax burden on their salaries but are not entitled to many benefits. Accordingly, wages remained flat when adjusted for inflation in the three months through October, IBGE said.

That should keep inflation at bay, near the bottom end of the government’s targeted range, giving the central bank a wide berth to cut interest rates to an all-time low next week.

A sweeping overhaul of the labor market that took effect in November could help boost legal employment in coming months. Small Brazilian firms, which account for 99 percent of all companies, are making plans to bring workers onto their books, Reuters reported earlier this month.

Falling unemployment, coupled with slow inflation, has boosted household spending, which has so far been the biggest driver of economic growth this year. (Reporting by Bruno Federowski; Editing by Bernadette Baum)

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