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Brazil's Job Creation, Tax Collections for June Point to Slowing Economy
Brazil’s tax collection and job creation results for June were below economists’ forecasts, signaling growth has slowed since the economy expanded at the fastest pace in 15 years in the first quarter.
Brazil’s economy created 212,952 government-registered jobs in June, less than the median of three forecasts of economists surveyed by Bloomberg for 279,000 jobs. The figures compare with 298,041 registered jobs created in May, the Labor Ministry said in a report distributed today in Brasilia.
The government collected 61.5 billion reais ($35 billion) in taxes last month, missing the 64 billion-real median forecast of 11 economists surveyed by Bloomberg. The figures compare with 54 billion reais in the same month last year, the tax agency said in a report distributed today in Brasilia.
“The less-than-expected tax collection figure increases the risk that the government won’t deliver fiscal results this year,” said Diego Donadio, senior Latin America analyst at BNP Paribas in Sao Paulo. “If the government doesn’t slow the pace of spending, it increases the risk that the central bank will have to raise interest rates.”
Latin America’s biggest economy expanded at the fastest pace since 1995 in the first quarter, prompting policy makers to raise the benchmark interest rate in two consecutive meetings to 10.25 percent from a record low of 8.75 percent in March. Retail sales and industrial production also missed estimates in May, signaling a slowdown.
The real erased an earlier gain and fell 0.3 percent to 1.7684 per U.S. dollar at 11:35 a.m. New York time, from 1.7625 yesterday. The yield on the interest-rate future contract due January, the most traded in BM&F Bovespa stock exchange today, fell six basis points to 11.15 percent.
The pace of Brazil’s economic expansion will ease in the third quarter after the government withdrew stimulus measures including tax cuts, Finance Minister Guido Mantega told reporters in Brasilia yesterday. The central bank’s seasonally adjusted economic activity index fell to 139.55 points in May from 139.58 points in April, also pointing for lower growth.
Brazil’s service sector accounted for roughly a third of all new formal jobs created in the country in the first six months of the year, Labor Minister Carlos Lupi told reporters in Brasilia today.
Lupi today said that 490,028 new posts were created in services in Brazil in the first half of 2010. Lupi yesterday said that about 1.5 million formal jobs had been created in Brazil in the first half of 2010, a record for the period.
The government-registered job creation number is a balance of posts created minus job eliminated. Registered jobs, 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: Iuri Dantas in Brasilia at at idantas@bloomberg.net Arnaldo Galvao in Brasilia at at agalvao1@bloomberg.net
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