The national unemployment rate reached 11.6% in January, down 1.0pp over one year. The urban unemployment rate fell to 11.1%, a drop of 1.3pp from January 2024, well below the Bloomberg market consensus and our call of 11.8% call. Employment increased 4.0% yoy in January (+3.3% in December), while the labor force rose 2.8% yoy (+2.3% yoy previously). The participation rate increased 0.8pp from January 2024 to 64.1%. Sequentially, employment rose from December 1.1% (+0.6% previously), while the unemployment rate (SA) dropped by 0.2pp from December to 9.4%, and the urban unemployment rate fell 0.2pp to 9.1% (well below BanRep’s NAIRU estimate of 10.5%).
Self-employment and private salaried posts boosted job creation. In the quarter ending January, employment increased 3.0% yoy (+2.2% in the 4Q24), supported by self-employment increase of 4.6% (+1.9% in 4Q24), private salaried posts (+2.9%; +2.7% in 4Q24), while public sector jobs were broadly stable over the last year (+1.9% in 4Q24). Real state, manufacturing, hospitality and commerce were key job drivers on an annual basis.
Our Take: We expect the average unemployment rate to remain stable this year at 10.2%, but risks tilt to a lower print as the activity recovery process advances. A slow disinflationary process and tight labor market support a gradual easing of the contractionary monetary policy.