• Peru: A pleasant surprise as the jobs market shows seasonal strength in Lima


It’s not always easy to gauge the strength of Peru’s economy. Just on May 16, we were mildly discouraged by m/m GDP growth figures of -1.3% in March. And, yesterday, employment figures for Lima are the best since pre-COVID-19 days. Unemployment in Lima plummeted to 8.3% in the three-month period ending in April, from 9.4% in the three-months to March (chart 1). The number of jobs in Lima, at 5.1 mn, has surpassed pre-COVID-19 levels for the first time (chart 2). Jobs growth was not only 22.9% higher y/y (mobility restrictions were still in place at this time in 2021), but also 3.7% higher than the same February-to-April period in 2019.

Let’s not get too excited, however. April has a seasonal component to it, as it is the beginning of the academic year at school and universities. In the past, this has frequently led to employment spikes.

The second caveat is that employment growth is taking place mostly in lower-income jobs. Pre-COVID-19 job levels were breached only in the segment of small businesses, those having ten or less employees. Job levels at larger businesses, which tend to pay better, have yet to return to pre-COVID-19 levels. Not surprisingly, then, low-income jobs, frequently in the informal economy, were up 31%, whereas full-time, permanent jobs paying higher wages (“adequate”) were still 11.7% below the same period in pre-COVID-19 2019 (chart 3). As a result, average monthly wages are still 6.0% below the same period in 2019, in nominal terms. In real terms, the lag in wages is closer to 16%.

Having said that, however, the April employment data for Lima was encouraging, although it would be wise to wait and see if it is repeated in the May data.

Note that the National Statistics Institute employment data is for three-month periods, which doesn’t match exactly with the monthly GDP data.

—Guillermo Arbe


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