Brazil’s labor market opened the year with a slight increase in the unemployment rate compared with the end of 2025, but stability relative to the previous quarter and indicators still close to the best levels since the official records began—such as employment and the number of unemployed—according to the Brazilian Institute of Geography and Statistics (IBGE). The data also showed record levels for income and the overall wage bill.
More Brazilians draw unemployment insurance despite strong hiringRise in new income sources and household consumption
The unemployment rate rose to 5.4% in the quarter ending in January from 5.1% in the quarter ending in December, according to the Continuous National Household Sample Survey (Pnad Contínua). November and December appear in both quarters, which is why the stats agency does not recommend this comparison. Compared with the previous quarter, ending in October, the rate remained stable at 5.4%. Among economists, the result is viewed as positive and indicative of the strength of Brazil’s labor market.
“It is good news in the sense that the first months of the year usually show a worsening of unemployment—not because the economy is weaker, but due to seasonal factors that repeat every year. If we are seeing stability, it means the situation has improved. The labor market still shows resilience despite the economic slowdown,” said Daniel Duque, who holds a PhD in economics from the Norwegian School of Economics and is a researcher at FGV Ibre.
It is common for unemployment to rise at the start of the year as temporary workers hired at the end of the previous year are dismissed. However, this movement observed at the start of the year has not been sufficient to offset the gains recorded at the end of 2025, according to Adriana Beringuy, the IBGE coordinator responsible for household sample surveys.
“This unemployed population had been declining and has stabilized in this analysis. Even with this first data point for 2026, it does not immediately rise. This seasonal contraction in employment has not yet been strong enough to offset the gains seen at the end of last year.”
According to the Continuous Pnad, in the last quarter of 2025 the unemployment rate stood at 5.1%, the lowest level in the historical series that began in 2012. The IBGE, however, does not consider that the rate increased in the quarter ending in January, since the months of November and December appear in both quarters.
“We are approaching a floor; there is little room for improvement due to structural factors. It would require an increase in labor force participation or economic activity, which we are not seeing. We believe unemployment will worsen only marginally,” said André Valério, senior economist at Banco Inter.
In the quarter ending in January, Brazil had 5.9 million unemployed people—individuals aged 14 or older who sought work but were unable to find it. The figure represents a 1% decline compared with the previous quarter ending in October. The change is classified by the IBGE as statistical stability.
Even so, it was the lowest level for a quarter ending in January in the survey’s historical series, which began in 2012. Compared with all quarters, it is the third lowest figure, behind only the quarters ending in December 2025 (5.5 million) and November 2025 (5.6 million). Compared with the same period in 2025, the number fell 17.1%—a decline of 1.2 million people.
The quarter also set records for both worker income and the total wage bill in Brazil’s economy. Average worker income rose 2.8% from the previous quarter to R$3,652. Meanwhile, the real wage bill usually received by employed people (across all jobs) totaled R$370.3 billion in the quarter, up 2.9% from the previous quarter.
“As long as unemployment remains low, we will continue to see income rising. With a heated labor market, workers can negotiate better salaries and switch jobs in search of higher pay. Employers who need to attract workers in a scenario of labor scarcity push wages to rise faster than the overall pace of the economy,” Duque said.
Among analysts, there is some concern that unemployment data may create discomfort for the Central Bank given the still-strong labor market. However, according to Yihao Lin, economist at Genial Investimentos, the scenario should not prevent the start of a monetary easing cycle expected at the Central Bank’s next meeting later this month.
“In this context, although the data confirm the robustness of Brazil’s employment market, they should not be enough to change the beginning of the interest-rate cutting cycle at the March meeting, with an initial easing of 0.5 percentage points, mainly reflecting the progress made in recent months toward bringing inflation back to target,” he said.
