Brazil Resilient but Gradually Less Tight Labor Market; Stable Participation Rate; Soft Employment and Real Wage Growth (Ramos)

Economics Research 30 July 2026 | 9:05AM EDT

Brazil: Resilient but Gradually Less Tight Labor Market; Stable Participation Rate; Soft Employment and Real Wage Growth (Ramos)

Bottom Line: The labor market remains strong but there are now budding signs that job Alberto Ramos | creation and real wage growth are softening. The unemployment rate printed at 5.4% in Goldman Sachs & Co. LLC line with consensus. Seasonally adjusted, the unemployment rate remained at 5.5%, near record lows and below the NAIRU range of estimates. Employment was flat mom sa in June (flat over the last three months), with stable formal employment (informal up 0.1% mom sa). The average real income of employed workers moderated to 2.8% yoy (-0.4% mom sa) with the real wage bill of the economy expanding 3.6% yoy (-0.4% mom sa; adding to the May -0.8% mom sa variation). The labor force participation rate remained at 62.1% sa, down from 62.4% in June-25 (generous fiscal transfer/benefits are likely weakening labor force participation, particularly among informal sector workers). Overall, the labor market

For the exclusive use of remains strong but is starting to exhibit tentative signs that it is becoming gradually less tight. Restrictive monetary conditions are yet to generate a visible inflection point in the labor market and a resilient labor market backdrop is still adding significant cost-push pressures on inflation, services in particular.

National Unemployment Rate: 5.4% vs. consensus at 5.4% and GS at 5.4%.

1. The national unemployment rate printed at 5.4% in the 3-month period ending in Jun, in line with consensus and below the 5.8% print a year ago. In seasonally adjusted terms, the unemployment rate remained at 5.5%, close to the lowest level in more than 15 years and below the NAIRU range.

fce07ef8421611dd87ec0014c24035ec 2. Employment grew 0.7% yoy (flat mom sa) in Jun vs. 0.8% yoy (also flat mom sa) in May, with formal jobs flat mom sa (informal sector employment rose 0.1% mom sa). 3. Average real income of employed workers (in all jobs) decelerated to 2.8% yoy (-0.4% mom sa) in Jun; vs. 4.0% yoy (-0.9% mom sa) in May. 4. The real wage bill of the economy expanded 3.6% yoy (-0.4% mom sa) in Jun, vs 4.8% yoy (-0.8% mom sa) in May. 5. The active labor force was flat mom sa in Jun and the contingent of individuals outside the labor force was also stable mom sa. 6. The economically active labor force rose 0.3% yoy (flat mom sa) and the working age population expanded 0.8% yoy. 7. Labor force participation remained at 62.1% (sa), below the 62.4% Jun-25 print. Generous fiscal transfers are likely behind the soft labor force participation,

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particularly of informal workers. 8. Since the onset of the pandemic, the working age population has risen by 8.5mn (5.1%) but the active labor force has risen just 3.9mn (3.7%), implying a sizeable 4.6mn (7.4%) increase in the number of individuals outside the labor force. Part of that reflects demographic dynamics.

Tight Below-NAIRU Unemployment Rate Moderating Real Wage and Employment Growth

Percent Percent change, year ago Percent change, year ago Percent change, year ago 15 Change yoy (rhs) 4.0 11 Average Real wage growth (%yoy) 11 Unemp Rate (sa) (lhs) Employment growth (%yoy)

Source: Haver Analytics, IBGE, Goldman Sachs Global Investment Research Source: Haver Analytics, IBGE, Goldman Sachs Global Investment Research

Unemployment Rate Below the NAIRU Range Declining Labor Force Underutilization

Percent Percent Percent 15 35 35 14 Underutilization of labor force (%)*

fce07ef8421611dd87ec0014c24035ec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: Haver Analytics, IBGE, Goldman Sachs Global Investment Research *Unemployed, underoccupied due to insufficiency of hours worked and people in potential labor force as a share of broad labor force

Source: Haver Analytics, IBGE, Goldman Sachs Global Investment Research