During the entire phase of the weak cyclical recovery, job creation has been disappointing. However, the data from the Continuous PNAD announced last week presented a ray of hope: if employment growth is maintained until de end of the year at the pace of the first quarter, the unemployment rate will fall by some 2 percentage points. In this note we analyze the job market data, concluding that it is too soon for any optimism about the performance.
The result for the job market measured by the Continuous PNAD was surprisingly positive in the first three months. Unemployment reached 12.0% in March, 0.3 percentage point lower than at the end of 2018. More importantly, this reduction was the result of a significant expansion of the occupied population – about 2 million in annualized terms – and of non-underemployed who accounted for 2/3 of the growth of occupation in the first quarter. The increase of occupied workers in the first three months was so strong that if the same pace continues for the rest of the year, assuming the participation rate remains stable at its current level, the unemployment rate will fall to 10.5% at the end of the year.
The first word of caution regarding this scenario is the fact that a large contingent still exists of underemployed and discouraged workers, and when these individuals are included, the decline of the unemployment rate is more modest, only 0.1 percentage point in relation to December.
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