The labor market in Brazil showed unexpected signs of strength in November. The unemployment rate dropped below expectations to 4.9%, its lowest level for November. The working population grew 2.8%, above the yearly average, despite weak economic growth. The number of non-working people declined for the fourth month in a row, suggesting more people are entering the workforce. Average incomes rose 5.3% year-over-year, accelerating the growth in total real payroll. However, the economist maintains a moderate growth forecast for 2013 due to expectations of slower workforce expansion and contained income growth in a context of full employment.

1. The labor market surprises
December 21, 2012
The November Monthly Employment Survey brought compelling new signs of strength in the
labor market. The unemployment rate dropped to 4.9%, slightly below market expectations
(Pine: 5.0%; Bloomberg median: 5.1%) and is at its lowest level for the month in question.
Likewise, according to our calculations, the seasonally adjusted rate felt from 5.5% to 5.3%,
renewing its historical low.
Again, we saw above-average growth of the working population (2.8% versus 2.1%). This
growth is surprising due to the weak performance of the economy and the structural limits at
these levels of employment. Likewise, the workforce growth was also above its 2012’s
average (2.5% versus 1.5%).
Seasonally adjusted unemployment rate – historical minimum
13%
12%
11%
10%
9%
8%
7%
6%
5%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Unemployment rate (seasonally adjusted)
Source: IBGE; Research Macro & Commodity Research
Another interesting trend is the behavior of the non-economically active population, whose
fourth consecutive monthly decline suggests the labor market strength has attracted those
who previously opted not to seek employment or who were out of IBGE statistics. We believe
it helps explain the recent declines in entry level salaries; away from the labor market for
some time and therefore possibly less productive, this type of worker accepts lower wage
offers. It is also interesting to note that this occurs simultaneously with the increase in
turnover sector workforce.
Finally, considering the annual rise of 5.3% in average income - which again accelerates over
the previous month - the real total payroll growth (roughly the rise in working population
increased by the rise in average real income) also pointed to an acceleration in November,
from an annual increase of 7.8% to 8.2% (in fact, its highest level this year). Even so, we
maintain our moderate scenario in total real payroll for 2013 (3.0% to 5.0%) due to the
prospect of lower growth in the working population in a context of full employment,
contained income growth - with the reduction in minimum wage real gains.

2. Entry level and dismissal wages (BRL)
1.150
1.100
1.050
1.000
950
900
850
2009
2010
2011
2012
Entry level Dismissal
Source: Ministry of Labour (CAGED); Research Macro & Commodity Research
If not, labor productivity will continue to grow less than real working income, leading to
higher average costs in the industry and the economy as a whole, mediocre production growth
and lower investments. After all, companies invest individually and not as a "class". In other
words, the best way to cope with the loss of productivity in the economy (or the rise in unit
labor costs), reduced operating margins and rate of profits would be via increasing
investment. But what entrepreneur invests individually when unit costs are soaring? This is
exactly why we project real GDP growth of 2.6% and a stable of Selic (at worst) for 2013.
Total real payroll ≈ working pop. + average income (% YoY)
11% % YoY
9%
7%
5%
3%
1%
-1%
2008
2009
2010
2011
2012
Total real payroll
Working population
Average income
Source: IBGE; Research Macro & Commodity Research
Marco Antonio Maciel Marco Antonio Caruso
Chief economist Economist
Banco Pine Banco Pine

3. Disclaimer
This report has been prepared by PINE Research Macro/Commodities, a research department of Banco Pine S.A., PINE Securities USA LLC
(“PINE”), a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory
Authority and the Securities Investor Protection Corporation, is distributing this report in the United States. PINE assumes responsibility for
this research for purposes of U.S. law. Any U.S. person receiving this report and wishing to effect any transaction in a security discussed in
this report should do so with PINE at +1-646-398-6900, 645 Madison Avenue, New York, NY 10022.
Banco Pine refers to PINE, as well as Banco Pine S.A. and PINE Investimentos.
This report is for distribution only under such circumstances as may be permitted by applicable law. This report is not directed at you if PINE
is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself
before reading it that PINE is permitted to provide research material concerning investments to you under relevant legislation and regulations.
Nothing in this report constitutes a representation that any investment strategy or recommendation contained herein is suitable or
appropriate to a recipient’s individual circumstances or otherwise constitutes a personal recommendation. It is published solely for
information purposes, it does not constitute an advertisement and is not to be construed as a solicitation, offer, invitation or inducement to
buy or sell any securities or related financial instruments in any jurisdiction. Prices in this report are believed to be reliable as of the date on
which this report was issued and are derived from one or more of the following: (i) sources as expressly specified alongside the relevant data;
(ii) the quoted price on the main regulated market for the security in question; (iii) other public sources believed to be reliable; or (iv) PINE's
proprietary data or data available to Banco Pine. All other information herein is believed to be reliable as of the date on which this report
was issued and has been obtained from public sources believed to be reliable. No representation or warranty, either express or implied, is
provided in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information
concerning PINE, its subsidiaries and affiliates, nor is it intended to be a complete statement or summary of the securities, markets or
developments referred to in the report. In all cases, investors should conduct their own investigation and analysis of such information before
taking or omitting to take any action in relation to securities or markets that are analyzed in this report.
As of the end of the month immediately preceding the date of publication of this report, neither Banco Pine nor any its affiliates beneficially
own 1% or more of any class of common equity securities of the companies analyzed in this report. In addition, neither Banco Pine nor its
affiliates: (a) have managed or co-managed a public offering of securities for the companies; (b) have received compensation for investment
banking services from the companies in the past 12 months; or (c) expect to receive or intends to seek compensation for investment banking
services from the companies within the next three months. Pine Research issues its views pursuant to relevant factors necessary to
recommend an investment decision and independently of any instructions that Investimentos might have from any covered company with
which it has a business relationship. The recommendations given by the Pine Corporate Research with respect to the shares covered by its
analysts respond exclusively to the analysis of the merits and the market conditions in which the publicly-traded companies operate.
Banco Pine does not undertake that investors will obtain profits, nor will it share with investors any investment profits nor accept any liability
for any investment losses. Investments involve risks and investors should exercise prudence in making their investment decisions. Banco Pine
accepts no fiduciary duties to recipients of this report and in communicating this report is not acting in a fiduciary capacity. The report
should not be regarded by recipients as a substitute for the exercise of their own judgment. Opinions, estimates, and projections expressed
herein constitute the current judgment of the analyst responsible for the substance of this report as of the date in which was issued and are
therefore subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of Banco
Pine as a result of using different assumptions and criteria. Any such opinions, estimates, and projections must not be construed as a
representation that the matters referred to therein will occur. Prices and availability of financial instruments are indicative only and subject
to change without notice.
Research will initiate, update and cease coverage solely at the discretion of Pine Research. The analysis contained herein is based on
numerous assumptions. Different assumptions could result in materially different results. The analyst(s) responsible for the preparation of this
report may interact with trading desk personnel, sales personnel and other constituencies for the purpose of gathering, synthesizing and
interpreting market information. Banco Pine is under no obligation to update or keep current the information contained herein, except when
terminating coverage of the companies discussed in the report. Banco Pine relies on information barriers to control the flow of information
contained in one or more areas within Banco Pine, into other areas, units, groups or affiliates of Banco Pine. The compensation of the analyst
who prepared this report is determined by research management and senior management (not including investment banking). Analyst
compensation is not based on investment banking revenues, however, compensation may relate to the revenues of Banco Pine as a whole, of
which investment banking, sales and trading are a part.
The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Options, derivative
products and futures are not suitable for all investors, and trading in these instruments is considered risky. Mortgage and asset-backed
securities may involve a high degree of risk and may be highly volatile in response to fluctuations in interest rates and other market
conditions. Past performance is not necessarily indicative of future results. If a financial instrument is denominated in a currency other than
an investor’s currency, a change in rates of exchange may adversely affect the value or price of or the income derived from any security or
related instrument mentioned in this report, and the reader of this report assumes any currency risk.
This report does not take into account the investment objectives, financial situation or particular needs of any particular investor. Investors
should obtain independent financial advice based on their own particular circumstances before making an investment decision on the basis of
the information contained herein. For investment advice, trade execution or other enquiries, clients should contact their local sales
representative. Neither Banco Pine nor any of its affiliates, nor any of their respective directors, employees or agents, accepts any liability
for any loss or damage arising out of the use of all or any part of this report.
Any prices stated in this report are for information purposes only and do not represent valuations for individual securities or other
instruments. There is no representation that any transaction can or could have been effected at those prices and any prices do not necessarily
reflect Banco Pine’s internal books and records or theoretical model-based valuations and may be based on certain assumptions. Different
assumptions, by Banco Pine or any other source, may yield substantially different results.
This report may not be reproduced or redistributed to any other person, in whole or in part, for any purpose, without the prior written
consent of Banco Pine, and Banco Pine accepts no liability whatsoever for the actions of third parties in this respect.
Additional information relating to the financial instruments discussed in this report is available upon request.
Regulation A-C Certifications
The analyst responsible for the production of this report hereby certifies that the views expressed herein accurately and exclusively reflect his
or her personal views and opinions about any and all of the issuers or securities analyzed in this report and were prepared independently and
autonomously.