Brazil's Unemployment Rate Hits Record Low of 5.1% in 2025 Amidst Economic Slowdown

Historic Low for Brazilian Unemployment

Brazil's unemployment rate concluded 2025 at a remarkable low of 5.1% in the three months ending December, marking the lowest figure recorded since the data series began in 2012. The annual average unemployment rate for 2025 also reached a historic low of 5.6%, a significant decrease from 6.6% in 2024. These figures were released by Brazil's official statistics bureau, the Instituto Brasileiro de Geografia e Estatística (IBGE), based on its Continuous National Household Sample Survey (Continuous PNAD).

Factors Contributing to a Heated Job Market

The sustained decline in unemployment is attributed to a strengthening labor market. Net employment in Brazil rose to a record high of 103 million people in 2025. The number of unemployed individuals fell to approximately 5.5 million. The underutilization rate, which measures the percentage of the workforce that is either unemployed, underemployed, or in the potential workforce, also dropped to a new low of 13.5%. Key sectors driving job creation included:

• Commerce
• Public administration
• Education
• Health and social services

Additionally, the average monthly income for Brazilian workers saw an increase, reaching BRL 3,560, up 5.7% compared to 2024. The number of formally employed workers also hit a record of 38.9 million, an increase of 1 million from the previous year.

Economic Deceleration and Policy Challenges

Despite the positive labor market indicators, Brazil's economy experienced a deceleration in 2025. The World Bank projected the country's economic growth to slow from 3.2% in 2024 to 2.2% in 2025. This slowdown was primarily influenced by a restrictive monetary policy, with the Central Bank maintaining high interest rates, including the Selic rate at 15%, to combat persistent inflation. These high rates made credit more expensive and dampened investment, contributing to a decrease in formal job creation, which totaled 1,279,498 in 2025—the lowest level in five years.

Fiscal policy also tightened, with the central government recording a primary deficit of 61.7 billion reais (approximately $11.88 billion) for the full year 2025, representing 0.48% of GDP. Despite these economic headwinds, private consumer spending and the robust labor market remained crucial drivers of Brazil's economic activity.

Outlook

The record-low unemployment rate in Brazil highlights the resilience and dynamism of its labor market. However, the concurrent economic deceleration, influenced by tight monetary and fiscal policies, presents a complex economic landscape. The challenge for policymakers will be to sustain job growth while navigating efforts to control inflation and manage fiscal stability.