LATAM Today July 30, 2026

Economics Research 30 July 2026 | 9:41AM EDT

BRAZIL Alberto Ramos | Goldman Sachs & Co. LLC Resilient but Gradually Less Tight Labor Market; Stable Participation Rate; Soft Employment and Real Wage Growth Sergio Armella | Bottom Line: The labor market remains strong but there are now budding signs that job Goldman Sachs & Co. LLC creation and real wage growth are softening. The unemployment rate printed at 5.4% in Santiago Tellez 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 Goldman Sachs & Co. LLC

(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 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.

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. 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.

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Generous fiscal transfers are likely behind the soft labor force participation, 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.

Moderate Increase in Credit Origination in June; Record High Household Indebtedness and Debt Service Bottom line: Credit origination rose 0.2% mom sa in real terms in June, driven by non-earmarked credit to corporates (+1.2% mom sa). Credit to households declined (-0.4% mom sa), driven chiefly by the directed/earmarked credit segment. NPLs on corporate credit declined by 10bp to 4.0% and on credit to households remained at 7.6%. Lending rates for corporates declined by 50bp to 24.4%, and for households rose by a sizeable 120bp to a very high 64.0%. Household indebtedness remained at a near record high: 49.8% of disposable income in May-26 (up 96bp from May-25), with debt service up 12bp to a record high 28.5% of disposable income (up 130bp from a year ago).

We expect credit conditions to face headwinds in the coming months from tight monetary policy, slower growth, and softer labor-market dynamics. However, lending activism by public banks, along with new federal government- and public bank-sponsored lending facilities ahead of the 4Q26 elections, should continue to…