TCEB: Brazil May Unemployment Higher Than Expected as Recession Looms by David Biller June 25, 2015 — 5:46 PM IST Share on FacebookShare on Twitter Don't Miss Out — Follow Bloomberg On Facebook Twitter Instagram YouTube Share on Facebook Share on Twitter Brazil’s unemployment rate rose in May more than analysts forecast as higher rates and tighter fiscal policy stifle activity in Latin America’s biggest economy. The jobless rate increased to 6.7 percent from 6.4 percent a month earlier, the national statistics institute said Thursday. That was higher than the 6.6 percent median estimate from 34 economists surveyed by Bloomberg and the highest in nearly five years. Unemployment has spiked as the economy contracts with the government tightening policy. That makes it a politically inconvenient moment for President Dilma Rousseff’s government to have restricted access to unemployment insurance as part of its fiscal adjustment. Above-target inflation is eating into real wages and further depressing sentiment, as Rousseff’s approval rating plumbs new lows. Swap rates on the contract due in January 2017 rose six basis points, or 0.06 percentage point, to 14.00 percent at 9:09 a.m. local time. The real weakened 0.1 percent to 3.1005 per U.S. dollar. Following passage by Congress, Rousseff this month signed into law a measure to reduce unemployment benefits. The bill is one of four measures forming part of Finance Minister Joaquim Levy’s austerity package. Three have passed thus far, and the lower house approved the basic text of a bill to boost corporate taxes early Thursday morning. Unwinding Benefits Unwinding corporate tax benefits may affect unemployment, Senate President Renan Calheiros told reporters Tuesday before meeting Planning Minister Nelson Barbosa in Brasilia. As Levy tightens fiscal policy, the central bank’s directors have raised the benchmark interest rate at six straight meetings to 13.75 percent to rein in price increases. Inflation in the 12 months through mid-June accelerated to an 11-year high of 8.8 percent, above the ceiling of the central bank’s 2.5 percent to 6.5 percent target range. Faster inflation helped provoke a 5 percent fall in real wages in May from the same month last year. That, along with higher borrowing costs, has kept consumer confidence hovering near a record low. Analysts surveyed by the central bank forecast economic contraction of 1.45 percent this year. A Datafolha poll published June 21 showed Rousseff’s approval rating fell to 10 percent, the lowest of any Brazilian leader since 1992. The poll of 2,840 people was conducted June 17-18, and has a margin of error of plus or minus two percentage points.
razil’s unemployment rate rose in May more than analysts forecast as higher rates and tighter fiscal policy stifle activity in Latin America’s biggest economy.
The jobless rate increased to 6.7 percent from 6.4 percent a month earlier, the national statistics institute said Thursday. That was higher than the 6.6 percent median estimate from 34 economists surveyed by Bloomberg and the highest in nearly five years.
Unemployment has spiked as the economy contracts with the government tightening policy. That makes it a politically inconvenient moment for President Dilma Rousseff’s government to have restricted access to unemployment insurance as part of its fiscal adjustment. Above-target inflation is eating into real wages and further depressing sentiment, as Rousseff’s approval rating plumbs new lows.
Swap rates on the contract due in January 2017 rose six basis points, or 0.06 percentage point, to 14.00 percent at 9:09 a.m. local time. The real weakened 0.1 percent to 3.1005 per U.S. dollar.
Following passage by Congress, Rousseff this month signed into law a measure to reduce unemployment benefits. The bill is one of four measures forming part of Finance Minister Joaquim Levy’s austerity package. Three have passed thus far, and the lower house approved the basic text of a bill to boost corporate taxes early Thursday morning.
Unwinding Benefits
Unwinding corporate tax benefits may affect unemployment, Senate President Renan Calheiros told reporters Tuesday before meeting Planning Minister Nelson Barbosa in Brasilia.
As Levy tightens fiscal policy, the central bank’s directors have raised the benchmark interest rate at six straight meetings to 13.75 percent to rein in price increases. Inflation in the 12 months through mid-June accelerated to an 11-year high of 8.8 percent, above the ceiling of the central bank’s 2.5 percent to 6.5 percent target range.
Faster inflation helped provoke a 5 percent fall in real wages in May from the same month last year. That, along with higher borrowing costs, has kept consumer confidence hovering near a record low. Analysts surveyed by the central bank forecast economic contraction of 1.45 percent this year.
A Datafolha poll published June 21 showed Rousseff’s approval rating fell to 10 percent, the lowest of any Brazilian leader since 1992. The poll of 2,840 people was conducted June 17-18, and has a margin of error of plus or minus two percentage points.
