Peru Jobs Rise as Lima Crime Weighs on Business

But the gains are fragile. Businesses and transport operators say escalating crime, including extortion and killings tied to protection rackets, is raising operating costs and discouraging investment, especially in lower-margin sectors that rely on daily mobility and street-level commerce. That puts the recovery at risk even if headline employment keeps rising.

For investors, the story cuts both ways. A larger workforce supports consumer-linked companies and local demand, but persistent insecurity can compress margins, deter hiring and complicate growth plans for firms exposed to Lima’s streets, logistics network and discretionary spending. It also keeps pressure on policymakers ahead of local elections, with public safety likely to dominate the debate.

The backdrop has been mixed for markets watching Peru. EPU, the iShares MSCI Peru ETF, has recovered to about $89.99, above its 50-day moving average of roughly $86.09 and well above its 200-day average near $79.53, while momentum readings remain firm. That suggests investors are still giving Peru some benefit of the doubt, even as security risks threaten the durability of the labor-market improvement.

The next test is whether authorities can contain violence and preserve business activity in the capital. If they cannot, Lima’s record employment could prove less a sign of broad-based strength than a temporary high point in an economy facing a growing security tax.