Brazil Jobless Rate at Low for September on Growth Outlook

Brazil’s unemployment rate was at a record low for September as companies expect the economy to rebound from its slowest growth in three years. The benchmark stock index surged the most since Sept. 13.

Unemployment fell to 5.4 percent from 6 percent a year earlier, even as it rose compared with August, the national statistics agency said in Rio de Janeiro today. The median estimate of 35 analysts surveyed by Bloomberg was for a 5.3 percent jobless rate.

Unemployment has remained at historic lows this year even as growth slows in the world’s second-largest emerging market. President Dilma Rousseff’s government has enacted a series of stimulus measures to spur expansion, including eliminating payroll taxes and other incentives to companies that pledge to avoid firing workers. Companies have hoarded workers and held off on new hiring in the anticipation of economic recovery.

“For this time of year it’s still a relatively good result, especially given the background of slow growth,” Daniel Snowden, emerging markets analyst at Informa Global Markets, said by phone from London. “If unemployment can remain around these levels it provides a strong platform for the economy to continue its recovery going forward into next year.”

Brazil’s benchmark stock index rose 1.66 percent to 58,109.04 points at 11:02 a.m. local time. Swap rates on the contract maturing in January 2013, the most traded in Sao Paulo today, were little changed at 7.11 percent.

Economic Growth

Economists surveyed by the central bank forecast growth will accelerate to 4 percent in 2013, after slowing to 1.54 percent this year. The economy grew at annualized rates of 0.5 percent and 1.6 percent in the first and second quarters.

Brazil generated 150,334 jobs in September, up from 100,938 in August and the most since April, according to a Oct. 17 Labor Ministry report. Still, September job creation was down 28.1 percent from last year as demand for exports slumps amid a slowdown in China and a deepening of Europe’s debt woes.

Yesterday, the government extended until the end of the year a cut to so-called IPI taxes for vehicles as part of its plan to revive economic growth.

“Brazil is one of the few countries where employment continues to expand,” Finance Minister Guido Mantega told reporters yesterday. “Manufacturing industry, the sector most affected by the crisis, is already increasing employment.”

Car manufacturing is a cornerstone of Brazil’s economy and the tax cuts helped push sales to a record 420,080 vehicles in August.

Rate Cuts

Since August 2011, officials have also cut the benchmark Selic rate by 525 basis points to a record low of 7.25 percent, more than any Group of 20 nation.

Recent growth figures have been “very frustrating” and have given unions pause for thought in pushing for large raises in the second half of the year, said Luiz Edmundo Prestes Rosa, education director at the Brazilian Human Resources Association, a group of personnel professionals and companies that follow labor market trends.

In the first half of the year, 96.5 percent of the employees that negotiated their wages got increases above the national consumer price index, according to a survey published in August by Dieese, a trade union research institute. That was the highest level since 1996, when Dieese started the research.

The unions “in the second semester will be more realistic than in the first semester,” Rosa said by phone on Oct. 24 from Sao Paulo. “They are not going to be asking for huge increases as compared to the first semester.”

To contact the reporter on this story: David Biller in Boston at dbiller1@bloomberg.net.

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

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