U.S. Markets closed

Only 4.6% of Brazilian workers are unemployed. But what’s good news for growth is less so for Brazil’s ongoing battle with inflation

Jacob Albert

Brazil’s unemployment dropped to 4.6% in December—the lowest level on record and down from 4.9% in November. And though December’s unemployment came in a bit higher than analysts expected, that 4.6% is a milestone of sorts given that it breached the previous record-low of 4.7% unemployment in December of 2011.

After two years of economic stagnation—GDP grew a mere 0.1% in 2012—Brazil’s government has been working aggressively to stimulate growth. With those policy effects seeping into the economy, companies have stepped up hiring in anticipation of economic rebound, driving unemployment on its steady decline. Here’s a look at that trend:

Brazil’s stimulus program has seen it cut borrowing costs to record lows, increase tax breaks and boost public spending, putting the country’s GDP on track to increase some 3.2% this year.

The sectors that saw the greatest proportional hiring increases in 2012 were domestic services (a 7.6% increase), construction (4.6%), business (4.2%) and the industrial sector (3.6%). On average, wages increased 3.2% in 2012.

The downside of nearly full-employment and rising wages is persistently high inflation, which has not dipped below the central bank’s target of 4.5% in nearly two and a half years. High consumption levels supported by low unemployment have buoyed demand for domestic credit, which plays a worryingly emergent role in the Brazilian economy.

More from Quartz