Antecedent Indicator of Employment in Brazil has slight recovery in May

The Employment Background Indicator (IAEmp) showed some improvement in May after reaching the lowest level in the historical series in the previous month, but the permanence of uncertainty undermines expectations of a definitive recovery of the labor market in the short term. The Getulio Vargas Foundation (FGV) reported on Tuesday that IAEmp, which anticipates the direction of the labor market in Brazil, rose 3.0 points in May to 42.7 points. In April, the indicator had retreated to a low in the historical series, accumulating a loss of 52.6 points in the three months from February. "The result can be interpreted as an accommodation of the index at a very low level considering that this is still the second lowest value in the series," FGV economist Ibre Rodolpho Tobler said in a note. "The high uncertainty still does not allow us to imagine scenarios of recovery of the labor market in the short term, which should cause the indicator to continue recording low numbers in the coming months," he added. The Coincident Unemployment Indicator (DCI), which captures the perception of families about the labor market, rose 1.2 points in May to 99.6 points, the highest level since October 2018. The behavior of the DCI is similar to that of the unemployment rate, that is, the lower the number, the better the result. "The result suggests that the unemployment rate should have a negative impact already in the second quarter and still no indication of a reversal of this trend in the short/medium term," Toblers added. In the quarter ended In April, the Brazilian unemployment rate rose to 12.6%, with record losses in occupation and the number of unemployed reaching 12.8 million, in view of layoffs caused by coronavirus restriction measures.