Employment generation exceeds market expectations

The formal job market remains robust and surprising the market, to the delight of the government of President Luiz Inácio Lula da Silva (PT). According to data from the Ministry of Labor and Employment (MTE), released this Wednesday (27/3), 306.1 thousand jobs were created with a formal contract in February this year, 81.7% above the January balance, of 168.5 thousand. Compared to the 252.5 thousand vacancies created in the same month of 2023, the growth was 21.2%.

This positive balance is the best for the month since February 2022, but is still below the peak for the second month of 2021, of 397.9 thousand. This result is the difference between admissions and dismissals, which totaled 2,249,070 and 1,942,959, respectively. As a result, the number of workers with a formal contract reached 45.9 million, the same level as in November 2023, considering the new methodology of the General Register of Employed and Unemployed People (Caged), from the MTE, from 2019.

February data was well above market projections. “February’s result confirms the robustness of the formal job market; record numbers of admissions and dismissals on request”, highlighted Bruno Imaizumi, economist at LCA Consultores.

He said that LCA’s forecasts were for 185 thousand new vacancies, and the market median was around 230 thousand. He recalled that the services sector was responsible for 63% of the vacancies created in February. This segment, which employs the most in the country, accounted for 258.9 thousand new positions in the first two months of the year: 56.4% of the 476.6 thousand vacancies created from January to February. Commerce followed in the opposite direction and registered net closures of 21,824 vacancies in the same period.

Salary falls

According to the LCA analyst, the new Caged methodology is more comprehensive, “capturing more information, contributing to a higher number of data”. “The indicator serves, in some way, to show the degree of warming in the job market, as it is imagined that a good part of these people are leaving to be hired elsewhere (there is a greater supply of vacancies) — the record result reinforces this perception,” he explained.

According to data from Caged, the real average admission salary was R$2,082 in February — a drop of 2.4% compared to January, but an increase of 1.4% compared to the same month in 2023. In the evaluation of Imaizumi, Caged’s result in the first two months signals “a more resilient labor market scenario than expected”. He said that the consultancy revised the projection for the number of vacancies created this year from 1.2 million to 1.5 million.

Rodolfo Margato, economist at XP Investimentos, also recognized that the Caged data came in above the market consensus, around 235 thousand vacancies, and above XP’s projections, of 161 thousand new occupations with a signed license. Despite the interannual growth in the wage bill, Margato stated that the numbers are compatible with the tight labor market scenario, “but not necessarily overheated”. He also highlighted that the services sector, once again, was the highlight of the Caged data.

“Overall, the formal job market continues to surprise positively and should boost domestic demand. The steady growth of employment and real wages are the main factors behind our projection of 2.5% expansion for consumer consumption families this year”, he highlighted. According to him, the brokerage projects the net creation of 1.45 million formal jobs this year.

“They will make mistakes again”

When presenting the Caged data, the Minister of Labor, Luiz Marinho, said that President Lula was “very happy with this number and so are we”. “We hope that, in March, this positive trend will further reinforce”, said Marinho, yesterday, when presenting the Caged data. According to him, for this year, the government’s expectation is that — not only due to investments in government programs, such as the New Growth Acceleration Program (New PAC) and the announced investments in the automotive sector — more vacancies should be created than last year, which registered 1.5 million new formal jobs, which could reach 2 million. “The Gross Domestic Product (GDP) grew 2.9% last year and analysts predicted, at the beginning of the year, 0.5% (high). This year, experts are taking into account a growth of 1.5% at 1.7%. President Lula joked and said that economists will make mistakes again”, he stated.

According to data from Caged, the number of vacancies created in February is the highest for the month since 2022, but below the 397.9 thousand new positions created in the second month of 2021. “This is the result that we are starting to collect, because the fruits are ripening”, said Marinho, who sent a message to the Central Bank to cut interest rates further, despite the job market being hotter than expected.

High interest

Last week, the BC’s Monetary Policy Committee (Copom) reduced the economy’s basic rate (Selic) by another 0.5 percentage point (to 10.75% per year), but signaled that it could reduce the pace of cuts from June onwards, largely because the job market is performing better, and this could generate inflationary pressures, especially in the services sector, which weighs the most on the economy and employs the most. “I wanted to draw the attention of the Central Bank because interest rates are absurd and the BC does not need to be worried, because the job market is stronger. The care they have to take is to continue reducing the interest rate, because Brazil continues to with the second highest rate (of real interest, discounted for inflation) in the world. Interest rates are high and it is necessary to continue with the reduction for the economy to continue growing”, said Marinho.

He recognized, however, that the increase in the wage bill has not been occurring through productivity growth. To achieve this, companies still need to invest more in improving machines. “Companies need to reformulate machines that are eventually obsolete to increase productivity. And, to this end, I invite the Central Bank to further increase this debate, and not (stick to) a simple observation of global numbers. an in-depth look at each sector to be able to talk about this issue of productivity”, said the minister.