IAEmp rose 1.5 points in September compared to August, strongest rise since April
10/06/2022
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Rodolpho Tobler — Foto: Leo Pinheiro/Valor
Influenced by good results in services, the largest employer in the economy, the employment leading indicator (IAEmp) rose 1.5 points in September compared to August, to 83.8 points. It was the strongest rise since April 2022 (4.5 points) and took the indicator to the highest level since October last year (87.1 points), said Fundação Getulio Vargas (FGV) on Wednesday.
When detailing the result, Rodolpho Tobler, the FGV economist in charge of the indicator, recalled that services are currently undergoing a process of recovery – after the “thump” suffered by the sector during the most acute period of the pandemic, which began in 2020. However, when questioned about the continuity of the IAEmp’s high, he was cautious. In practice, the sustainability of greater openings, as well as the positive balance of the indicator, will depend on the trajectory of the economy, which still has many uncertainties for the future, especially for 2023, he noted.
When detailing the behavior of the September indicator, Mr. Tobler pondered that, in his understanding, the good performance of the IAEmp reflects what has been happening in employment, and in the economy, in recent months. There has been an improvement in the health outlook related to the pandemic, with an advance in vaccination against Covid-19 and, consequently, a reduction in the rate of cases and deaths. This has pushed more consumers to face-to-face activities, which were heavily restricted during the pandemic.
This aspect, he noted, has mainly benefited the services economy, which has a higher “face-to-face” profile, such as bars, hotels, restaurants, and tourism, among other activities. Therefore, this sector has been recovering month by month, which boosted the economy as a whole. On the supply side, the services activity represents more than 70% of the Brazilian GDP, reminded Mr. Tobler
At the same time, the outlook of recovery in services favors employment, since the sector generates many jobs, acknowledged Mr. Tobler. “In the IAEmp, we had a total high of 8.8 points in six months [until September],” he says, while illustrating the impact that services had on the indicator in recent months. “The economy has shown resilience,” he said. “And the services sector has been stronger [in pace of activity] than expected.”
However, when talking about the future, the same statements cannot be repeated, according to him. Mr. Tobler recalled that there is consensus, among analysts, of a weaker economy in 2023. This is because there are signs of a continuing environment of higher basic interest rates, a way to tackle inflationary advances. This curbs greater consumption power, as well as the cadence of economic activity, with an impact on different activities in the economy, including services, he says.
For Mr. Tobler, whether employment remains in a favorable scenario will depend mainly on the future trajectory of the economy. “The labor market is fine. But as good as it is, it still has a long way to go,” he added.
*By Alessandra Saraiva — Rio de Janeiro
Source: Valor International