Brazil’s economy created the fewest jobs since 2003 last year as government subsidies designed to stimulate consumption and industrial production failed to prevent the economy from shrinking in the third quarter.
Brazil created 730,687 jobs, down from 868,241 the year before, the Labor Ministry said in a report today. The economy shed 449,444 jobs last month as employers from manufacturing to retailing fired workers. The median estimate of 13 analysts polled by Bloomberg was for 473,000 people to lose their job in December.
The economy shrank in the third quarter for the first time since 2009 on a drop in investment, even after the state cut taxes on payrolls and consumer goods to boost consumption. Analysts polled by Bloomberg forecast Dilma Rousseff will deliver the slowest growth of any president in more than two decades when her first term ends this year.
Retailers added 208,025 employees last year, down 23 percent from 270,393 in 2012, while new construction jobs fell by 51 percent to 35,071 from 70,896, according to ministry data. The manufacturing industry hired 83,568 people last year, more than double the 33,222 new jobs in 2012.
Gross domestic product will expand 2.3 percent this year after climbing by the same pace in 2013, according to analysts polled by Bloomberg. Latin America on average will expand 2.9 percent this year after climbing 2.38 percent last, according to the survey.
Annual inflation in Brazil accelerated to 5.91 percent in 2013, exceeding the official 4.5 percent target for the fourth straight year. Analysts surveyed Jan. 17 by the central bank forecast consumer prices will rise 6.01 percent this year and 5.6 percent in 2015.
Brazil’s government won’t try to slow inflation by easing growth in the jobs market, Labor Minister Manoel Dias told reporters in Brasilia today. Latin America’s largest economy will create 1.4 million to 1.5 million jobs this year, he said.
Policy makers in a bid to slow inflation have raised the benchmark Selic interest rate in seven straight meetings to 10.5 percent. Rates on swap contracts due January 2015, the most traded in Sao Paulo today, rose 0.05 percentage point to 11.06 percent at 4:58 p.m. local time.
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