Argentina unemployment falls in reprieve for economy and Milei

Unemployment in Argentina fell in the second quarter even as overall economic activity slightly contracted, a reprieve for job seekers and President Javier Milei amid a growing list of setbacks. 

Joblessness in Argentina’s formal labour market cooled to 7.6 percent in the April-June period from 7.9 percent in the previous quarter, according to government data published Thursday. Unemployment was unchanged from a year ago as gross domestic product shrank during the quarter when analysts had projected mild growth.

One concerning trend continued as Argentina added 178,000 informal jobs in the second quarter compared to just 45,000 formal jobs added, according to the data.  

The drop in unemployment is a welcome improvement for Milei amid a slew of setbacks almost a month before midterm elections. Investors are closely watching to see if the libertarian leader can boost his presence in Congress to pass more market-friendly reforms. 

Milei’s disapproval rating hit a new high in September, his party lost a big vote in Buenos Aires Province and, as a result, markets have dumped Argentine bonds and the currency. The losses escalated Wednesday at the Central Bank stepped in to defend the peso as it reached the ceiling of a trading band established by the government in its US$20-billion program with the International Monetary Fund. 

Despite lower unemployment, the labour market hasn’t recovered from his historic austerity cuts at the start of his presidency. Argentina’s formal private sector job market is still down by about 101,000 jobs, or two percent of the total, since he took office. Manufacturing and construction lead job losses among industries, according to separate labor statistics published by the government through June.