Brazil unemployment hits two-decade low of 5.6%

Brazil’s unemployment rate slipped to 5.6% in the three months through May, from 6.2% a year earlier, the government’s IBGE stats agency said on Friday. Overall it was kind of similar to the 5.8% logged in the previous rolling quarter ending in February, so not much of a swing there. In the end this points to a steadier labor market, at least for Latin America’s biggest economy, with employed people reaching 102.7 million, up 0.8% compared to the same period in 2025.

UNDERUTILIZATION AND WAGES

The composite underutilization rate , which sort of counts the unemployed, the underemployed by hours, or those in the potential labor force, fell notably to 13.3% , slipping from 14.9% a year ago. Also, discouraged workers got hit by a sharp decline, around 14.6% over the last twelve months , landing at 2.4 million people.

Meanwhile, average real monthly income stayed pretty steady at 3,726 reais ($642) versus the previous quarter, but it still inched up 4.0% year-on-year. The total mass of real labor income reached 377.7 billion reais, up 4.8% from May 2025, so basically suggesting that household purchasing power in Brazil remains steady and not fading.

SECTORAL PERFORMANCE

Job growth was pushed, mostly by the public sector and logistics, pretty much that. Employment in "Public administration, defense, social security, education, and health" was up 3.8% year-on-year and it added something like 711,000 jobs. At the same time the "Transportation, storage, and mail" sector also did well, there was a 4.0% boost in its workforce.

On the other hand, domestic services kind of reversed, the number of workers in that segment actually slid 5.7% (around 329,000 people) compared to the same quarter last year..

INFORMALITY STABILIZES

The level of informality sat around 37.3% of the employed population, and that translated into 38.3 million workers. It’s sort of a modest uptick versus the 37.8% noted for the same span in 2025. Meanwhile, the count of private sector employees with formal contracts stayed roughly the same, at 39.3 million.