The Brazilian labor market is closing out 2025 on a high note, demonstrating significant strength and dynamism. Recent data released by the IBGE (Brazilian Institute of Geography and Statistics) paints a picture of a thriving economy, marked by a declining unemployment rate, increased job occupancy, and rising average incomes.
These positive trends are not only exceeding market expectations but also suggesting sustained economic momentum. The continued improvement in labor indicators is a key factor to watch as it impacts various economic sectors, including inflation.
The latest PNAD survey for November confirms a solid and heated job market, reinforcing previous optimistic forecasts. The data highlights a record low in unemployment, coupled with enhanced job participation and a decrease in informal work, all contributing to a healthier economic environment. This information was released by the IBGE on Tuesday, December 30th.
Unemployment Rate Reaches New Historic Lows
The national unemployment rate saw a notable decrease, falling from 5.4% in October to 5.2% in November. This figure surprised analysts, who had anticipated the rate to remain stable. The quarterly moving average, which accounts for seasonal fluctuations, also improved, dropping from 5.8% to 5.5%.
According to XP, their own seasonally adjusted monthly estimate showed an even more significant drop, from 5.5% to 5.1%. This indicates a strong downward trend in joblessness across the country.
Job Creation Shows Renewed Momentum
A significant highlight from the November data is the resurgence in total employment growth after three consecutive months of moderate decline. XP estimates that total employment increased by 0.8% month-over-month in November, reaching 102.8 million individuals. This represents a 1.1% increase compared to November 2024, leading to a 2.1% gain in the 12-month moving average.
Experts point out that a substantial portion of this employment growth was driven by the public services sector, specifically in areas such as Public Administration, Defense, Social Security, Education, Health, and Social Services. This sector alone added 310,000 jobs in November, a considerable increase from the average of 75,000 jobs added in the preceding four months.
COP 30 Influence and Public Sector Impact
While the exact reasons for the surge in public sector employment are still being analyzed, some economists suggest a potential link to the UN Climate Change Conference (COP 30) held in Belém. However, this event alone may not fully explain the overall surprise in total employment figures. André Valério, senior economist at Inter, noted that public administration was the sole sector to register an increase in occupied positions, adding 492,000 people.
Valério further elaborated that the public sector accounted for 250,000 of these new jobs in the quarter, reaching a record 13.1 million employees in the historical series. He also emphasized that public administration’s lower sensitivity to economic cycles means this employment improvement should not be misinterpreted as a sign of monetary policy ineffectiveness. Instead, he highlighted that sectors more sensitive to interest rates continue to show no acceleration in employment dynamics.
Formal Employment Remains Resilient
The resilience of formal employment was also a key takeaway from the November data. The total number of formal jobs increased by 2.9% year-over-year, resulting in a 3.5% rise over 12 months. On a monthly basis, formal employment grew by 0.9%, reaching 64.0 million positions.
Conversely, informal employment categories saw a decline of 1.8% compared to the previous year, marking the fourth consecutive quarterly decrease. Although there was a slight monthly increase of 0.4% in informal jobs, the overall trend points to a shrinking informal sector. Valério anticipates that the total employed population will grow by 1.9% in 2025 compared to 2024.
Wages Show Steady Growth Amidst Economic Strength
The continuous evolution of worker income is another positive indicator for the Brazilian economy. Matheus Pizzani, an economist at PicPay, highlighted that income expansion reached 1.8% in the quarter ending in November. Compared to the same period in the previous year, this growth was a robust 4.5%.
Pizzani noted that while income is still expanding, it is showing signs of greater accommodation. This is partly attributed to the fall in inflation, as seen in the annual comparison. The more moderate growth rates, despite the ongoing decline in unemployment, suggest that labor incorporation is occurring organically and is not constrained by aggregate supply limitations.
Positive Outlook for the Labor Market
Economists are optimistic about the continued strength of the labor market in the coming months and into 2026. Claudia Moreno, an economist at C6 Bank, projects that the unemployment rate will remain below 6% for both 2025 and 2026, a historically low level for Brazil. This sustained low unemployment rate is a strong indicator of economic health.
XP’s analysis of the PNAD statistics reinforces the view of a tight labor market, with the current unemployment rate well below the neutral level, a situation unlikely to reverse soon. They expect the unemployment rate to reach 5.5% in fiscal year 2025 and 6.0% in 2026. Valério of Inter, however, cautions that recent currency depreciation might question the timing of interest rate cuts, but still expects the exchange rate to normalize, allowing for monetary easing to begin.
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