Lateralizing unemployment, despite economic slow-down

URUGUAY - In Brief 24 Jan 2023 by Esteban Fernández Medrano

December unemployment data came out at 7.9%, roughly speaking constant compared with 7.8% in November and the same as the 2022 average. This only modest rise happened despite the current economic slowdown, observed in most activity indices and the monetary tightening implemented by the BCU, which recently raised its reference rate another 25bps to slow inflation. Also, activity and employment indices rose to 62.7 (+0.3%m/m) and 57.7 (0.2%m/m) respectively. The marginal increase in unemployment is caused by the activity index (i.e., people wanting to enter the labor market) faster than employment is generated. Although December has a mild positive seasonal effect, favoring employment creation, the fact that both indices still improved, in this context, is supportive. It suggests some resilience in the current labor market to a lower growth scenario.

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