Argentina’s unemployment rate rose to 7.8% in the first quarter, up from 7.5% in the previous quarter. The quarter-on-quarter increase indicates a modest deterioration in labour market conditions at the start of the year.
The latest reading marks a 0.3 percentage point rise over the prior period. With no further breakdown provided, the data point offers a headline measure of joblessness rather than detail on participation, underemployment or sectoral shifts.
Macroeconomic Slowdown and Market Implications
The recent rise in Argentina’s unemployment rate to 7.8% confirms our view of a slowing economy. This follows last week’s inflation data, which, while lower at 4.5% month-over-month for May 2026, still points to persistent price pressures that are eroding consumer purchasing power. We anticipate this will translate into further market weakness.
We see the Argentine Peso (ARS) facing significant headwinds against the US dollar. The central bank’s limited foreign reserves, which fell by another $600 million this month to just under $28 billion, will make it difficult to support the currency. Therefore, we are adding to our long positions in USD/ARS non-deliverable forwards for the third quarter.
Equity, Credit, and Strategy Response
For the equity market, the combination of rising unemployment and high borrowing costs is a negative catalyst for corporate earnings. We are buying put options on the Merval index and on major financial sector stocks, as these are most exposed to a downturn in domestic credit and consumption. Historically, periods of rising unemployment have preceded sharp corrections in the local stock market, as seen in the downturns of 2018 and 2020.
The uptick in joblessness also increases the perceived risk associated with Argentina’s sovereign debt. Five-year credit default swap (CDS) spreads have widened by 40 basis points to 1920 bps since the unemployment figures were released. We believe there is still room for spreads to go wider and are buying further protection as a hedge.
