Jobs become vital for Dilma's decision on interest rates.

247 – On a Wednesday with the release of bad economic indicators, yet another number stands out. Regarding the crown jewel of the Dilma government, full employment, a measurement by the Seade Foundation and Dieese found an increase in unemployment in seven regions surveyed. The rate of 11,3% in April, compared to 11% in March, indicates a loss of 52 jobs in the country between those two months.

The indicator is likely to carry weight in the ongoing Copom meeting, which will decide today whether there will be a change in the basic interest rate. With the Selic rate at 7,5%, the Central Bank directors met amid market expectations pointing to an increase of up to 0,5 percentage points in the rate. This possibility, however, seems unlikely due to the release this morning by IBGE of GDP growth figures: only 0,6% in the first quarter of this year compared to the last quarter of last year. 

The GDP result seems to indicate that the decision to raise the Selic rate by 0,25 percentage points at the last Copom meeting was not the right one. At a time when the economy was beginning to respond to the government's stimulus measures for consumption and industry, the Central Bank's decision pleased the financial market, but did not send a positive message to many productive sectors of the country.

With declining GDP growth forecasts for 2013 – Finance Minister Guido Mantega pointed to 2,2% today – President Dilma Rousseff, who has remained absent from the debate on interest rates, must be hoping that the Central Bank's Monetary Policy Committee (Copom) will not change the Selic rate or, in a difficult scenario, will promote a reduction. One such gesture would be a demonstration by the Central Bank of its willingness to give breathing room to economic policy so that it can reap the benefits of its actions. In a press conference, Mantega emphasized that industrial investment has been "widespread," which would be a positive response to the stimuli "that are on the table," in the minister's words.

To arrive well-positioned in 2014, as a candidate capable of securing her reelection in the first round, Dilma needs the maintenance of a full employment regime. This is what has distinguished Brazil on the global stage. The Central Bank's Monetary Policy Committee's understanding of this situation will define, today, much of what the future holds for the economy and politics.

Below is a news article from Agência Brasil regarding unemployment data from Fundação Seade and Dieese:

Unemployment rate rises in seven regions of the country.

Flavia Albuquerque
Reporter from Agência Brasil

São Paulo – The unemployment rate rose from 11% in March to 11,3% in April in the seven regions analyzed by the State System of Data Analysis Foundation (Seade) and the Inter-Union Department of Statistics and Socioeconomic Studies (Dieese). According to data from the Employment and Unemployment Survey (PED), the total number of unemployed in these regions was estimated at 2,491 million people, 52 more than in the previous month.

The employment level in the metropolitan regions of Belo Horizonte, Fortaleza, Porto Alegre, Recife, Salvador, São Paulo, and the Federal District registered a 0,4% decrease due to the elimination of 80 jobs, a number greater than the number of people who left the labor market (29). The number of employed people in these seven regions was calculated at 19,557 million, and the economically active population at 22,047 million.

By sector, the employment level fell in the manufacturing industry (-98 jobs, equivalent to -3,4%), and in the trade and repair of motor vehicles and motorcycles (-47 jobs or -1,2%). The number of employed remained stable in Services (34 or 0,3%) and Construction (4 or 0,3%).

According to the PED (Employment and Unemployment Survey), the number of salaried workers decreased by 0,5%. The number of employees with formal contracts fell by 0,7%, and those without formal contracts fell by 1,3%. There was also a reduction in domestic workers (-1,4%) and an increase in the number of self-employed workers (0,6%).

The average income of employed individuals decreased by 0,4% in March, and that of salaried workers fell by 0,3%, reaching values ​​of R$ 1.583 and R$ 1.622, respectively.

According to Dieese analyst Ana Maria Belavenuto, although the employment rate is negative, it is promising because it is higher than that recorded in March (-1,1%). She highlighted the performance of the industry, which was one of the factors responsible for the drop in the number of jobs.