Services and industry explain rise in labor income – 03/16/2024 – Market

The last few weeks have given us a lot of new information about the performance of the Brazilian economy in 2023, and the 2.9% growth in GDP (Gross Domestic Product) ended up receiving more attention than other, much more surprising results.

The mass of labor income and per capita household income had double-digit real growth rates, unprecedented in the Continuous PNAD. According to IBGE (Brazilian Institute of Geography and Statistics), the mass of habitual income from work had the highest growth rate in the last 28 years: 11.7% in addition to inflation.

Nominal per capita household income was 16.5% higher than that published a year earlier. As the population growth considered by IBGE was 0.7%, this corresponds to a nominal expansion of 17.3% in the mass of household income from all sources.

IBGE intends to release an official number for real income growth in April, but, like the IPCA
(Broad National Consumer Price Index) rose 4.6%, we can now expect the rate to be around 11.4% and the mass of income from all sources to have grown by around 12.1%.

The jump in labor income, which accounts for three quarters of the total in Pnad Contínua, was driven by services (12.3%) and general industry (11.7%). It is another surprise, as the sector whose GDP grew the most was agriculture (15.1%), but its number of employed people fell by 4.2% and its mass of labor income was the only one to decrease (-2.8%) according to the household survey.

Among the service segments, the one that increased its income the most was accommodation and food, which increased by 20.3%. These are new pieces to the puzzle of an economy where the mass of income grows more than the GDP — of Brazil, China or India.