Brazil Unemployment Falls to Record Low, Prompting Markets to Push Back Rate-Cut Hopes

Overview

• IBGE reported the jobless rate at 5.4% in the quarter ended October, the lowest in the PNAD series, with 5.9 million unemployed and record figures for formal private employment and real incomes.
• Formal hiring slowed as the Novo Caged showed a net 85,147 jobs in October, below projections above 100,000 and the weakest result for the month since the new series began.
• Short-dated interest-rate futures rose after the unemployment print, reflecting reduced urgency for a January easing even after hawkish guidance from Central Bank president Gabriel Galípolo.
• The Ibovespa set a new closing record at 159,072 points and logged its best monthly gain in 15 months, while the dollar ended down at R$5.335 after Ptax-related volatility.
• The consolidated public sector posted a R$32.4 billion primary surplus in October, but state-owned firms had a R$149 million monthly deficit and R$6.35 billion year to date, prompting discretionary spending blocks around R$3 billion.