Brazil's jobless rate drops to 6.9% in quarter through June

SAO PAULO (Reuters) -Brazil's jobless rate remained at its lowest level in a decade in the three months through June, data from statistics agency IBGE showed on Wednesday, as the number of employed people in Latin America's largest economy hit an all-time high.

The unemployment rate in Brazil stood at 6.9% in the April-June period, IBGE said, in line with market expectations and down from 7.9% in the previous quarter, marking the lowest for the period since 2014.

Brazil's jobless rate has been hovering around historically low levels for the past year despite elevated interest rates, an indicator cheered by the government even though some worry it could trigger inflationary pressures.

"Great news, but no surprises," President Luiz Inacio Lula da Silva said on X after the latest figures were released. "Our work continues to yield results, creating more jobs for Brazilians."

Policymakers at the central bank, however, have cautioned that the strength of the labor market could fuel services inflation at higher levels, reducing the chances of interest rate cuts.

The bank last month suspended an easing cycle that had gradually brought down its benchmark Selic rate to 10.50% from a six-year high of 13.75%, citing unmoored inflation expectations. It is widely expected to stand pat again later on Wednesday.

"The Selic rate is still restrictive enough for the current inflation levels, but new pressures ahead could mean that monetary policy should stay restrictive for longer," said lender Inter's chief economist Rafaela Vitoria.

According to IBGE, the number of jobless people in Brazil was 7.5 million in the April-June period, down 12.5% quarter-on-quarter, while employed citizens totaled 101.8 million - the highest ever for the data series started in 2012.

Average real wages were up 1.8% in the quarter to 3,214 reais ($572), the statistics agency said.

Earlier this week, government data had showed that Brazil's economy created more formal jobs than expected in June.

"With the significant decline in unemployment throughout the first half, we now have a downward bias for our jobless rate projection at the end of the year," Itau economists said. "Today's data confirm that the job market remains tight."

($1 = 5.6218 reais)

(Reporting by Gabriel Araujo; Editing by Kirsten Donovan and Angus MacSwan)