Entrepreneurs ‘begin to see light at the end of the tunnel’ and improve hiring expectations, says FGV

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Leading Employment Indicator (IAEmp) reached 76.8 points in June, the strongest increase since April 2022 and the best result since October. Reproduction Entrepreneurs are beginning to “see light at the end of the tunnel” after a scenario of weak internal demand at the beginning of the year and now signal greater job openings in the coming months, according to analysis by Rodolpho Tobler, economist at Fundação Getulio Vargas (FGV). He made the observation when commenting on the rise of 2.2 points in the Antecedent Employment Indicator (IAEmp) in June, to 76.8 points, disclosed this Wednesday by the FGV. It was the strongest increase since April 2022 (4.5 points) and took the index to the highest level since October 2022 (79.8 points). The expert commented that, in June, the indicator showed widespread positive evaluations. “Of the seven topics that make up the IAEmp, six had an increase in June and the only one that did not showed a decrease that can be considered stability”, he said. Tobler refers, respectively, to variations in points observed in predicted use of services (0.2 point); service business trend (0.2 point) future local employment (0.1 point), current service business situation (0.7 point); predicted employment in industry (0.5 point); business trend in industry (0.5 point) and current business situation in industry (-0.1 point). In the expert’s understanding, businessmen, in general, felt an improvement in the internal market, in June, as well as a more positive scenario in the activity. “I believe that at the end of the second quarter we noticed a demand, a more favorable activity”, he pointed out. The technician also added that the trade and service sectors, the largest employers in the economy, were more aware of this warmer environment, of economic activity and demand. Another aspect mentioned by him, which may have helped to compound the increase in the IAEmp last month, is the growing expectation, from the market and businessmen, that there will be a cut in the basic interest rate (Selic) by the Copom, starting in August. When the Selic rate drops, market interest rates also drop – which facilitates purchases and investments. “June signaled to be a more promising month for IAEmp”, he summarized. However, the expert has a caveat. Even with the rise in June, the indicator is still at a level of 70 points, still far from the favorable quadrant of the indicator, 100 points. “We have an average score of 74.9 points on the indicator, from November 2022 to June 2023. This is very low”, added the coach. He reiterated that, in his understanding, the month of June shows good willingness on the part of the business community to hire more. However, at the moment, there is no way to “stake” that this better impetus to open vacancies will continue in the medium and long term horizons. This will depend on changes in activity and internal demand, over longer periods of time, he noted. “We have to wait to see if this favorable scenario will continue”, he said, stressing that this is the only way to have a sustainable upward trajectory for the indicator.

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