(Repeats with change to head or text)
By Jamie McGeever
BRASILIA, Feb 27 (Reuters) - Brazil’s jobless rate rose to 12 percent in the three months through January, statistics agency IBGE said on Wednesday, the first increase since March last year and more than economists had expected.
The rise reflects the tough task new President Jair Bolsonaro faces in injecting new life into an economy whose recovery from the 2015-16 recession has been largely sluggish, economists say.
The median forecast in a Reuters poll of 18 economists projected an unemployment rate of 11.9 percent, with estimates ranging from 11.3 percent to 12 percent. The increase marked an abrupt rise from 11.6 percent in December.
“The labor market picture remains extremely precarious,” said Julio Hegedus, chief economist at consultancy Lopes Filho & Associados. “There’s no sign of clear recovery. It’s still very slow and erratic.”
Economists point to slow job growth over the previous 12 months, poor quality of formal salaried jobs created and muted wage inflation as signs of a worrying amount of slack in the labor market.
Bolsonaro has staked much of his political capital on reviving growth through an ambitious economic agenda of cutting taxes, ramping up privatizations and a sweeping overhaul of the country’s social security system.
His pension reform bill aims to save more than 1 trillion reais ($300 billion) over the next decade, but it is likely to be watered down in Congress and the final savings may be well below that target, analysts say.
The Economy Ministry on Friday issued a stark warning on the economic impact of failing to pass any pension reform. On employment specifically, it said that the jobless rate could soar above 15.0 percent by 2023.
On the other hand, approval of meaningful reform could generate up to 8 million new jobs over the next five years, the Economy Ministry said.
For now, labor market slack should help keep a lid on market interest rates and cool any expectations the central bank might raise its official Selic rate from a record low 6.50 percent later this year.
“The unemployment rate remains exceedingly high,” said Alberto Ramos at Goldman Sachs. “The very high level of slack in the labor market and the economy more broadly suggests very low risk of ... pressure on inflation in the near-term.” (Reporting by Jamie McGeever and Camila Moreira; Editing by Steve Orlofsky)