Brazil’s Jobless Rate Rises in April More Than Analysts Forecast

Brazil’s Jobless Rate Rises in April More Than Analysts Forecast
by David Biller/Bloomberg
9:19 AM BRT
May 21, 2015

Brazil’s unemployment rate rose in April more than analysts forecast as Latin America’s biggest economy heads to its deepest recession in 25 years.
The jobless rate rose to 6.4 percent from 6.2 percent a month earlier, the national statistics institute said on Thursday. That was higher than the 6.3 percent median estimate from 33 economists surveyed by Bloomberg and the highest rate in almost four years.
Joblessness that fell to record-lows during President Dilma Rousseff’s first term helped her win re-election last year. Now, to restore Brazil’s finances, her government is working to pass austerity measures such as curtailing access to unemployment insurance. With unemployment on the rise and above-target inflation eroding wages, consumer and investor confidence has slid.
Swap rates on the contract due in January 2017 rose 4 basis points, or 0.04 percentage point, to 13.38 percent at 9:13 a.m. local time. The real weakened 0.4 percent to 3.0141 per U.S. dollar.
The lower house of Congress on May 6 approved the bill to reduce unemployment benefits, and it awaits passage by the Senate. The bill is the first of two key measures to cut social-security benefits that Finance Minister Joaquim Levy’s team initially forecast would lower spending by 18 billion reais ($6 billion) in 2015.
As Levy tightens fiscal policy, the central bank’s directors have raised the benchmark interest rate at five straight meetings to 13.25 percent to tame consumer price increases. Inflation in the 12 months through April accelerated to an 11-year high of 8.17 percent, above the ceiling of the central bank’s 2.5 percent to 6.5 percent target range.
Faster inflation contributed to a 2.9 percent fall in real wages in April from the same month last year. That, along with higher borrowing costs, has left consumer confidence hovering just above a record low.