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Brazil Job Creation Slows for Third Straight Month in July to 181,796
Brazil reported the third straight month of slower job creation in July, increasing the likelihood central bank policy makers may leave interest rates unchanged in their next meeting.
Brazil’s economy added 181,796 government-registered jobs last month, the smallest number since January, the Labor Ministry said today. Economists had predicted 183,472 new positions, according to the median forecast of eight analysts surveyed by Bloomberg.
Job creation figures show companies are adjusting their payrolls more cautiously after strong hiring in the beginning of the year, Labor Minister Carlos Lupi told reporters in Brasilia today.
“The job market grew a lot in the first months, now it is adjusting its pace,” Lupi said. “As we expect inflation to remain under control we don’t see the need for further interest rate increases.”
The government-registered job creation number is a balance of posts created minus jobs eliminated. Registered jobs assure employees benefits such as unemployment insurance and retirement payments by the government. The economy created 212,952 registered jobs in June and 298,041 in May.
Brazil has added jobs every month of this year as the economy expanded at a 9 percent annual rate in the first quarter, the fastest pace in 15 years. Last year, Brazil generated 995,110 registered jobs.
Bond Yields
Yields on benchmark bonds maturing in January 2012 declined to 11.22 percent, the lowest since September, as traders bet that policy makers will stop raising interest rates as growth slows. Futures trading shows investors are betting policy makers will keep the interest rate unchanged in September.
Traders are reducing bets on rate increases after central bank president Henrique Meirelles said Aug. 16 that inflation expectations are “around” the central bank’s target rate of 4.5 percent for next year, fueling speculation that policy makers will stop raising borrowing costs.
Economists’ median growth forecasts have fallen to 7.09 percent for 2010, down from 7.2 percent four weeks previously, according to a central bank survey of about 100 economists published this week.
The central bank raised the benchmark lending rate, known as the Selic, by a half-point to 10.75 percent in July, surprising 48 of 51 analysts surveyed by Bloomberg who predicted a third straight 0.75-point increase.
Annual inflation slowed to 4.6 percent in July, the lowest level in six months.
To contact the reporters on this story: Iuri Dantas in Brasilia at at idantas@bloomberg.net Matthew Bristow in Brasilia at mbristow5@bloomberg.net.
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