Wires

UPDATE 1-Brazil unemployment rate falls to 12.3%, but masks underlying weakness

Jamie McGeever

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BRASILIA, June 28 (Reuters) - Brazil's unemployment rate in the three months to May fell to 12.3%, statistics agency IBGE said on Friday, a move in line with expectations but one which masked several other indications that the labor market remains extremely weak.

While the headline unemployment rate fell for a second consecutive month, levels of underemployment and people leaving the workforce entirely were the highest since comparable records began in 2012, and real incomes fell.

Central bank policymakers have repeatedly pointed to the high unemployment rate, weak wage growth and widespread under-utilization of the workforce as disinflationary factors reflecting the economy's broad weakness.

The unemployment rate to 12.3% in the three months through May from 12.5% in the three months to April, and down from 12.7% in the same period last year, IBGE said.

But some 13 million Brazilians remain out of work, similar to the same period last year, IBGE said. The underemployment rate rose to a record 25.0% from 24.6% in the prior three-month period and same period a year ago.

A record 28.5 million Brazilians are underemployed, up more than 1 million from a year ago, while the number of people who have left the workforce altogether remained steady at a historic high around 4.9 million, or 4.4% of the working population, IBGE said.

Average household real income fell 1.5% to 2,289 reais ($598) a month from the preceding three months, and little changed from a year ago, IBGE said. (Reporting by Jamie McGeever Editing by Chizu Nomiyama)