Weekly Report 133
✅ US shutdown halts official data releases, while private ADP figures highlight continued labor market slowdown. The United States government entered a shutdown after the budget standoff between President Donald Trump and the Democrats. The shutdown disrupted the functioning of several federal agencies and prevented the release of key economic indicators, such as the Payroll. In this context, private data gained greater importance. The September ADP report reinforced signs of labor market weakening, pointing to a net job loss of 32k, downward revisions to August, and broad-based deceleration across both goods-producing and service sectors. The picture underscores the loss of traction in employment and strengthens expectations that the Federal Reserve will proceed with additional rate cuts by year-end.
✅ In Brazil, the latest indicators confirm that the labor market remains tight but is moving into a moderation phase. CAGED data showed a net creation of 147.4k formal jobs in August, below market expectations and signaling a slowdown in seasonally adjusted terms, after upward revisions to July. The PNAD Contínua indicated that the unemployment rate stood at 5.6 percent in the quarter ending in August, the lowest since 2012, with stability also in the seasonally adjusted series. Real wages remained broadly stable in the quarter but advanced 3.3 percent year-over-year, while the wage bill rose 5.4 percent from the previous year. This set of factors suggests that the labor market continues to provide important support to household income and consumption, but with signs that the pace of formal job creation is likely to lose momentum in the coming months.
✅ Finally, the Lower House approved the proposal to expand the income tax exemption, while the debate over free public transportation has begun to raise market concerns. This week, the fiscal agenda came into focus with the unanimous approval in the Chamber of Deputies of the proposal to raise the exemption threshold for income tax to R$5,000, accompanied by a progressive levy of up to 10 percent on annual earnings above R$600,000. At the same time, negotiations around Provisional Measure 1303 progressed, with the risk of defeat if the proposed taxation of LCI and LCA is maintained, leading the government to signal adjustments to reduce resistance in Congress. Meanwhile, markets reacted negatively to headlines about the potential implementation of a federal zero-fare public transport program. The issue triggered a repricing of assets, underscoring investor sensitivity to measures that increase fiscal pressures and reigniting concerns about the sustainability of the fiscal framework.
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