Formal job creation disappoints, raising warning signs
Brazil’s formal labor market posted its weakest April result since 2021, disappointing economists’ expectations and raising warning signs for employment in the coming months. In April, net formal job creation totaled 85,900 positions, according to data from the government’s New Caged payroll report. The figure surprised economists, as the median of 21 estimates collected by Valor Data pointed to a net creation of 215,000 jobs.
In the view of Mariana Rodrigues, economist at SulAmérica Investimentos, the data raise concerns about a potentially sharper decline in employment in 2026. “The creation of only 86,000 jobs frustrated market expectations, signaling a possible early movement toward slower job generation.”
According to economists interviewed by Valor, the next Caged reports will be crucial in determining whether the scenario reflects a structural slowdown in the labor market or merely an atypical result amid otherwise resilient employment and economic activity.
For Antonio Ricciardi, economist at Banco Daycoval, April’s weak figure came as a surprise. “The destruction of jobs in both retail and agriculture was unexpected, as was weaker-than-anticipated job creation in industry and construction (…) We had a very strong March followed by a very weak April, which could accelerate the gradual slowdown in the labor market.”
By sector, services led net job creation with 69,601 positions, followed by construction with 23,525 and industry with 9,256. Retail and agriculture, meanwhile, recorded net job losses of 8,114 and 8,378 positions, respectively.
“This poor aggregate result reflects weak performance across virtually all sectors. Agriculture, industry, and retail also posted their worst results since 2021. That shows April was genuinely a very bad month for all sectors,” he said.
Beyond elevated interest rates, and considering that the monetary easing cycle initiated by Brazil’s Central Bank in March has not yet had time to affect the labor market, Janaína Feijó, economist at the Brazilian Institute of Economics at the Getulio Vargas Foundation (FGV Ibre), said high household indebtedness may also be weighing on employment. With consumers less willing to spend, employers end up creating fewer jobs.
Feijó noted that, compared with March, there was a decline of roughly 152,000 jobs in the monthly balance. “That drop was driven largely by retail and services. Together, they accounted for more than 60% of the decline in the balance,” she said. “When we look at the annual variation, agriculture saw a drop of more than 320% compared with April 2025, a very sharp change for the month. Nothing extraordinary has happened so far this year, but it was a very large decline relative to the usual hiring pattern in agriculture.”
In the same year-over-year comparison, retail posted the second-largest contraction in percentage terms, at 117.9%. Regarding the sector, the economist said the situation is expected to reverse as seasonal periods of stronger activity, such as the year-end holidays, approach.
In agriculture, April’s data raise an even greater warning sign given the high probability that a “super El Niño” event could interfere with rainfall patterns across the country and damage Brazil’s harvest. Feijó warned that, depending on the consequences of the climate phenomenon, employment conditions in the sector could deteriorate to unprecedented levels.
For Santander economist Henrique Danyi, the loss of momentum in formal job creation points to a scenario that is somewhat less “uncomfortable” for the Central Bank than the one seen in the first quarter.
“When we return to a more controlled level, it becomes easier to say there is some degree of confidence in the slowdown of economic activity (…) The Caged data are significant for how the Central Bank views activity, whether the economy is overheating or not,” he said.