Things are going from bad to worse in Brazil where, contrary to what the stock market suggests, the economy continues to disintegrate.

Earlier today, the government reported that the labor market deteriorated further in February, with the unemployment rate surging to a record high (and higher than expected) 13.2%, resulting in 13.5 million unemployed workers (up from 10.4mn a year ago). The national unemployment rate printed at 13.2% in the 3-month period ending in February, up from 10.2% a year ago, and 7.4% two years ago. In seasonally adjusted terms the unemployment rate rose to 13.1% in February, from 12.9% in January and 10.1% a year ago.

Employment declined 2.0% yoy in the 3-month period ending in February and the economically active labor force expanded 1.4% yoy (slightly higher than the 1.3% yoy increase of the working age population). The labor force participation rate did not change from either January or a year ago. Formal salaried employment in the private sector contracted 3.3% yoy, while employment in the informal sector rose 5.5% yoy. Self-employment declined 4.8%. By sector of economic activity, industrial employment retrenched by 4.3% yoy (-511 thousand jobs), and employment in the construction sector declined 9.7% yoy (-749 thousand jobs).

There was some good news on the wage front where average real wages rose by 1.5% yoy in February: with average real wages of the self-employed down 2.5% yoy and of those working in the formal sector of the economy up 0.6% yoy. However, the overall real wage bill of the economy declined 0.2% yoy in February driven by the retrenchment of employment (-2.0% yoy).

According to Goldman Sachs, looking forward, the labor market is likely to deteriorate further as the economy is yet to show signs of minimal positive growth to absorb new entrants into the labor force and with that stabilize the unemployment rate. Some analysts hope that the labor market dynamics will stabilize during 2H2017, and to start to recover towards the end of the year, however that hopeful take has yet to be validated.

The economy depression has taken a big hit on president Temer's popularity, whose government was rated "Good/Very Good" by only 10% in a just released CNI/Ibope Poll, compared to 13% in the previous survey conducted in December. On the other side, Temer's government was rated "bad/terrible" by 55% vs 46% in previous poll; rated "average" by 31% vs 35% previously.

Temer’s personal approval rating dropped to 20% vs 26% previously, while his personal disapproval rating rose to 73% vs 64% previously. Furthermore, 79% of respondents don’t trust Temer vs 72% in previous poll, and at the same time only 17% trust Temer vs 23% previously.

Should these trends continue, less than one year after the Rouseff impeachment, Temer himself may soon have to worry about a political overhaul of his own.