Economists see continued growth in job creation with wage increases adding pressure on inflation
Por Marsílea Gombata, Guilherme Pimenta, Gabriela Pereira — São Paulo, Brasília
The formal job market accelerated in July with a net increase in more jobs with formal contracts compared to the previous month. All sectors saw an increase in the net number of new positions, with industry being one of the most benefited. In the short term, economists predict that this trend will continue.
Brazil saw a net creation of 188,021 jobs with formal contracts in July, resulting from 2,187,633 hires against 1,999,612 dismissals, according to data from the General Register of Employed and Unemployed Workers (CAGED) released on Wednesday by the Ministry of Labor and Employment.
The result exceeded the median of 19 estimates from consultancies and financial institutions gathered by Valor Data, which projected a net creation of 183,100 jobs, with forecasts ranging from 156,251 to 235,000 new positions.
The result was better than that of July 2023, when 142,702 jobs were created. In the year to July, a net creation of 1,492,214 jobs was reported, compared to 1,483,598 in the same period in 2023.
Job creation occurred in all five regions of the country and all five sectors of the economy: services (79,167), agriculture, forestry, fishing, and aquaculture (6,688), industry (49,471), construction (19,694), and commerce (33,003).
Thiago Xavier, from consultancy Tendências Consultoria, noted that from January to July 2024, the net job creation was 320,000 higher than in the same period in 2023. Of these, a significant portion came from the industry.
“There were 134,700 in the industry, with 131,500 in manufacturing,” said Mr. Xavier, adding that the services sector generated 141,000 jobs. “This is positive because jobs in industry are better and have a higher average salary [than in services, for example].”
CAGED data show that the agricultural sector created fewer jobs this year, said Bruno Imaizumi, with consultancy LCA Consultores. All other sectors created more jobs from January to July 2024 compared to the same period in 2023.
“There are 1.4 million net jobs created this year, with only agriculture at a lower level than last year,” he said. “This is related to a smaller harvest this year and floods in Rio Grande do Sul. Fires in the countryside of São Paulo may reinforce this scenario.”
He also highlighted the number of resignations at the worker’s request, which reached a record 747,100 in July, 24% higher than in July 2023.
Mr. Imaizumi mentioned a survey released by the Ministry of Labor, along with CAGED data, on the reasons why formal workers resigned.
Of the 53,600 respondents between November 2023 and April 2024, 36.5% said they already had another job in sight, 32.5% cited low salary in the job they left, 24.7% said their work was not valued, 24.5% felt ethical issues in the company’s way of working, 16.2% reported conflicts with bosses, and 15.7% cited a lack of flexibility in work hours. The questions were multiple-choice, allowing respondents to choose more than one answer.
In July, the average hiring salary for formal employees was R$2,161.31, compared to R$2,138.37 in June. The average dismissal salary was R$2,232.45 in July, compared to R$2,202.12 a month earlier.
“This shows that the job market is quite tight. It indicates that many people are resigning because they possibly have a better job lined up,” said Hélio Zylbersztajn, a professor at the University of São Paulo (USP) and coordinator of the Salary Survey at the Economic Research Institute Foundation (FIPE).
Also in July, Brazil created a net of 13,639 new positions in intermittent, apprentice, temporary jobs, positions contracted under the Individual Economic Activity Register, or with workloads of up to 30 hours.
This number resulted from 291,020 hires and 277,381 dismissals. So far this year, there has been a net creation of 286,145 non-standard jobs.
For economists, the data showing a net job creation in July above the median market expectation poses a challenge to the Central Bank’s monetary policy.
Rodolfo Margato, an economist at XP, said the hiring salary saw a real increase of 0.3% in July compared to June and 2.2% compared to July 2023. The dismissal salary fell by 0.1% in July compared to June but grew by 1.4% compared to July 2023.
“These numbers reinforce our view of a tight job market, which should sustain consumption and, at the same time, keep service inflation pressured in the short term,” he wrote in a report to clients.
On Wednesday, the minister of Labor and Employment, Luiz Marinho, said that talking about interest rate hikes is “an economic aberration.”
“I hope the Central Bank talks about controlling inflation through supply, not demand restriction,” the minister said, highlighting the positive job market scenario presented by CAGED data on Wednesday.
The positive trend in the formal job market is expected to continue, and for 2024, there are no signs of a slowdown, economists say.
Mr. Zylbersztajn predicts that 2024 will end with a net creation of 1.8 million formal jobs. LCA projects a net creation of 1.9 million jobs, compared to 1.5 million last year.
For 2025, the outlook is for a slowdown, but with job creation still at a high level.
This article was translated from Valor Econômico using an artificial intelligence tool under the supervision of the Valor International editorial team to ensure accuracy, clarity, and adherence to our editorial standards. Read our Editorial Principles.