(Updates with job creation number in fourth paragraph.)
July 19 (Bloomberg) -- Brazil’s unemployment rate fell to its lowest since January as Latin America’s biggest economy shakes off efforts by policy makers to cool growth and inflation.
The jobless rate fell to 6.2 percent in June, from 6.4 percent in May and 7 percent a year earlier, the national statistics agency said today in a report distributed in Rio de Janeiro. The rate, the lowest ever for June, compared with a median forecast of 6.1 percent from 32 economists surveyed by Bloomberg.
“The numbers are strong, with the job market growing even at full employment,” said Gabriel Goulart, analyst at Mercatto Gestao de Recursos who helps manage $1.6 billion at the Rio de Janeiro-based asset management company. “It shows the economic deceleration is very soft.”
Central bank President Alexandre Tombini is expected to raise the benchmark interest rate, which now stands at 12.25 percent, for the fifth time in 2011 tomorrow to cool demand and slow the fastest inflation in six years. Brazil will create more jobs in the second half of the year than it did in the first, Labor Minister Carlos Lupi said today, reiterating his prediction that a record 3 million formal jobs will be generated in 2011.
Traders are betting on a quarter-point increase in the benchmark rate tomorrow, according to Bloomberg estimates based on interest rate futures.
Recent data show that the economy continues to expand at a pace that puts pressure on inflation. Retail sales recovered in May following an unexpected decline the previous month. Industrial capacity utilization was 82.4 percent in May, the same level it was in December before the central bank began raising rates. Consumer confidence rose in June from May.
The yield on interest rate futures maturing in January 2012, the most traded in Sao Paulo today, fell one basis point, or 0.01 percentage point, to 12.46 percent at 2:05 p.m. New York time. The real strengthened 0.6 percent to 1.5659 per U.S. dollar.
Brazil’s economy created 215,393 government-registered jobs in June, the Labor Ministry said today, less than the median forecast of 227,500 jobs from 13 economists surveyed by Bloomberg.
The labor market is showing signs of “stabilizing at a high level,” said Luciano Rostagno, chief strategist at CM Capital Markets in Sao Paulo.
“It’s too early to say that the labor market is showing signs of cooling,” Rostagno said in a telephone interview. “This won’t change the central bank’s outlook.”
Consumer prices rose 6.71 percent in the year through June, the fastest pace since 2005. The central bank aims to slow inflation back to the midpoint of its target in 2012. The government targets inflation of 4.5 percent, plus or minus two percentage points. Tombini said he expects inflation to start slowing after August.
Consumer prices will rise 5.37 percent over the next 12 months, according to the median estimate in a July 15 central bank survey of about 100 economists published on July 18. The figure was up from 5.29 percent the previous week.
Prices, as measured by the IPCA index, will rise 6.31 percent this year and 5.20 percent in 2012, the survey found.
Among companies increasing their workforces is Quiznos, the closely held Denver-based sandwich chain, which plans to open 200 locations in Brazil over the next 7 to 10 years to boost growth. Burger King Holdings Inc. said in June it aims to reach 1,000 restaurants in Brazil in the next five years, up from 108 now.
Tullett Prebon Plc, a London-based inter-dealer broker, said it will expand its Brazilian office by 50 percent to 120 people in the next two years to boost product offerings after acquiring a local firm, according to a July 15 interview with Richard Higgs, managing director for emerging markets.
The Bank of New York Mellon Corp.’s Brazil unit intends to boost its staff by more than 20 percent this year to expand operations in the South American country, President Zeca Oliveira said May 19.
Brazil’s government may propose a cut in the payroll tax, Carlos Alberto Barreto, head of the federal tax agency, said today. The government is also considering possible measures to make up for the loss of tax receipts if the payroll tax were cut, including an increase in the tax on profits known as the CSLL and a new tax on corporate revenue, he told reporters in Brasilia.
Any changes in the tax code must first be approved by Congress.
--Editors: Harry Maurer, Richard Jarvie
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