Brazil unemployment reaches 7.6% in January

[BRASÍLIA] Unemployment in Brazil for January reached 7.6 per cent, the highest for the month since 2009, according to government figures out Thursday.

Unemployment rates in the six largest metropolitan areas show that 1.9 million people were without a job in January, 146,000 more than the month before and half a million more compared to the same period in 2015, according to figures from the Brazilian Institute of Geography and Statistics (IBGE).

The Latin American powerhouse is in deep recession after years of growth led by high prices and strong Chinese demand for its oil, iron ore, soya and other commodities.

In addition, Brazil is crippled politically by gridlock in Congress and a protracted battle to impeach President Dilma Rousseff.

Brazil closed 2015 with an unemployment rate of 6.8 per cent, two points higher than the previous year, according to the IBGE.

The last time that Brazil had a higher unemployment rate was 8.2 per cent in January 2009.

The highest jump in unemployment was among workers between the ages of 18 and 24, which was more than two percentage points higher than in December 2015.

The hardest-hit sectors were education, health and public administration, all of which contracted 2.8 per cent, according to the figures.

Brazil's Central Bank estimates that the country's economy contracted between 3.7 and 4.1 per cent last year. The official figure is set to be released on March 3.

The government estimates that the economy will contract 2.9 per cent this year.

Brazil is also struggling with a double-digit inflation rate and a growing fiscal deficit.

On Wednesday, Moody's became the third big agency to cut Brazil's credit rating to junk, citing mounting debt and political instability in Latin America's biggest country.

Cutting the credit rating by two notches to Ba2, Moody's said Brazil suffered a "low growth environment," worsening debt, and "challenging political dynamics." Junk status had already been given by Fitch and S&P.

Moody's also said that it was giving Brazil a negative outlook, possibly heralding further downgrades.

AFP