March 18 (Bloomberg) -- Brazil will create a record number of formal jobs this year as the pace of economic growth accelerates on rising domestic demand, the labor minister said.

Brazil, Latin America's biggest economy, is forecast to create more than 1.8 million government-registered jobs this year up from the previous record of 1.62 million last year, Labor Minister Carlos Lupi told reporters today in Brasilia.

``Brazil's industry is growing and the agricultural sector too,'' Lupi said. ``There has been an increase in output in response to demand, without sparking inflation.''

Employers in Brazil are reluctant to create formal jobs -- positions that provide full benefits including insurance, retirement and severance -- because the cost of payrolls is about doubled by taxes. The surge in the more-desirable formal jobs is another sign of Brazil's economic strength.

Brazil's 6.2 percent growth in the fourth quarter beat analysts' expectations and was biggest year-on-year gain since June 2004 as consumer spending and business investment swelled, the government said on March. 12.

The number of government-registered jobs rose 39 percent in February from a year earlier, the Labor Ministry said today. The economy created 204,963 formal jobs last month compared with 148,019 in February 2007, the ministry said in a statement distributed from Brasilia.

The government-registered job creation number is a balance of posts created minus job dismissals. Registered jobs, the so- called formal work, assure employees a range of benefits such as unemployment insurance, bonuses and retirement payments by the government.

To contact the reporter on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net

Last Updated: March 18, 2008 14:47 EDT