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Brazil Added Record 2.52 Million Jobs in 2010 Printer friendly page Print This
By Iuri Dantas
Bloomberg
Thursday, Jan 20, 2011

Brazilian companies added a record number of government registered jobs in 2010 as Latin America’s biggest economy expands at the fastest pace in over two decades.

Brazil generated 2.52 million formal jobs in 2010, after companies hired a record 1.23 million workers and fired a record 1.64 million last month, the Labor Ministry said in a report distributed today in Brasilia. Labor Minister Carlos Lupi said Brazil may add 3 million jobs in 2011.

The world’s eighth-biggest economy probably expanded at the fastest pace in over two decades last year, according the median forecast of about 100 economists surveyed by the central bank Dec. 31. Part of the increase in job creation was due to a change in accounting methodology to include figures submitted by companies after the legal deadline.

“Now we have data more similar to what is happening in the real economy,” Lupi said. “Instead of waiting until the next quarter, we’ve decided to anticipate this calculation and present it today.”

Brazil will revise its 2010’s figures once more before March to include jobs created in December that weren’t submitted by companies before the deadline, Lupi said.

The ministry added 387,731 jobs created from January to November to last year’s database, using figures submitted by companies after the legal deadline. Companies may face fines when such numbers are presented after the due date, Lupi told reporters in Brasilia today.

‘Robust’ Demand

Domestic demand, fueled by record low unemployment and credit expansion may lead the $1.6 trillion economy to its fastest growth in more than two decades last year. Economists surveyed by the central bank last week forecast the pace of economic growth will slow to 4.5 percent this year.

Traders are wagering that policy makers will raise borrowing costs by 50 basis points to 11.25 percent tomorrow, according to Bloomberg estimates based on interest rate future contracts.

Policy makers left the Selic rate unchanged last month for the third-straight meeting, saying they needed more time to gauge the economic impact from measures to slow credit growth by raising banks’ reserve requirements.

Brazil’s strong labor market continues to underpin a “robust” domestic demand, policy makers said in the minutes of their last monetary meeting in December.

“Job creation reinforces the idea that the labor market continues to be tight and quite strong,” said Flavio Serrano, senior economist at Espirito Santo Investment Bank in Sao Paulo. Monetary policy will need to balance the growth in demand with supply conditions.”

Demand, Inflation

The 407,510 formal jobs lost last month compares with the loss of 415,192 posts in the same month of 2009. Brazil created 138,247 jobs in November.

Policy makers will raise the benchmark rate to 12.25 percent in 2011, as a heated economy helps spread higher food prices to other industries, such as services, Serrano said.

Unemployment hit a record low 5.7 percent in November, and is forecast to fall to 5.4 percent when December figures are published later this month, according to a Bloomberg survey of five analysts.

The yield on the interest rate future contract due February, the most traded in Sao Paulo today, rose 3.3 basis points, or 0.033 percentage point to 11.060 percent at 1:55 p.m. New York time from 11.027 percent yesterday. The real rose 0.3 percent to 1.6763 per dollar.

Brazil’s industrial output expanded 5.3 percent in November from a year earlier, led by a jump in automobile production, the national statistics agency said Jan. 5. The figure was higher than the median forecast for a 4.7 percent increase among 24 analysts surveyed by Bloomberg.

Brazil’s consumer prices rose more than economists expected in December, pushing last year’s inflation rate to the highest since 2004.

Consumer prices, as measured by the benchmark IPCA index, rose 0.63 percent in December, more than the 0.6 percent median forecast in a Bloomberg survey of 27 analysts. Prices rose 5.91 percent last year, the fastest annual pace since a 7.6 percent jump in 2004, the national statistics agency said.

The central bank targets inflation of 4.5 percent, plus or minus two percentage points.

To contact the reporter on this story: Iuri Dantas in Brasilia at at idantas@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

Source: Bloomberg News

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