Brazil's Unemployment Rate Drops to 5.4%, Boosting Market Optimism

Brazil’s unemployment rate fell to 5.4% in the quarter ending October 2025, marking the lowest level since 2012, according to the Brazilian Institute of Geography and Statistics (IBGE). This reflects a reduction from 5.6% in the previous quarter and 6.2% a year ago, with the number of unemployed individuals dropping to 5.91 million—a decline of 11.8% or 788,000 fewer job seekers compared to October 2024.

The labor market’s strength is evidenced by a record 102.5 million employed people, including 39.182 million with formal contracts, also a record. Total wage mass grew 5% year-on-year, reaching R$357.3 billion, which experts see as an important economic stimulant despite Brazil’s high interest rates currently at 15% to curb inflation above the 4.5% target.

Sector gains in October included a 2.6% rise in construction employment (adding 192,000 jobs) and a 1.3% increase in public administration and health services (252,000 jobs), while "other services" declined by 2.8% (156,000 fewer jobs). Despite the positive trends, informal employment remained steady at 37.8%, equating to 38.7 million informal workers. Social security contributor numbers reached a record 67.8 million, equivalent to 66.1% of employed workers.

The General Register of Employed and Unemployed (Caged) reported a net gain of 85.1 thousand formal jobs in October, but this was the slowest monthly growth since 2024 and 35% lower than the previous year, attributed mainly to high Selic interest rates.

Financial markets responded positively to the labor data. The Ibovespa stock index rose by 0.17% to 158,635 points and achieved an intraday record at 159,186 points, while the Brazilian real strengthened, with the dollar falling 0.41% to R$5.3297. Petrobras further boosted market confidence by announcing a US$109 billion investment plan through 2030, alongside dividend projections of US$45-50 billion.

Nevertheless, market trading volumes were subdued due to the U.S. Thanksgiving holiday and a prolonged 11-hour technical disruption at the CME Group, which affected global futures trading. Despite these disruptions, investor sentiment remains optimistic with expectations of stable economic conditions amidst Brazil’s labor market resilience, even under elevated interest rates.