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back to index backLATINtalk January,  2006


Brazil Created Most Jobs in a Year in September

Brazil's economy added 175,000 jobs in September, the most in a year, a sign growth may be poised to quicken as the central bank cuts interest rates.

The increase is the biggest since September 2004, when the economy added 198,000, the government said based on a survey of the country's six biggest cities. The jobless rate rose in the month to 9.6 percent from 9.4 percent in August as 249,000 Brazilians, more optimistic about job prospects amid a growing economy, entered the labor market.

``We have ambitious plans to hire workers and expand because the prospects for the economy in general are quite good,'' Michael Klein, chief financial officer at Casas Bahia, Brazil's biggest home appliances and furniture retailer, said in an interview in Sao Paulo. He said the company plans to add 22,000 workers this year and another 10,000 in 2006.

The central bank has cut the benchmark overnight rate the past two months, bringing it down to 19 percent from a two-year high of 19.75 percent in a bid to bolster the expansion in Latin America's biggest economy.

Alexandre Lintz, chief Brazil economist with BNP Paribas SA, said there is a chance that central bankers may quicken the pace of interest-rate cuts next month, lowering the rate three- quarters of a percentage point to 18.25 percent.

Unexpected

The rise in the jobless rate to 9.6 percent was unexpected. Economists predicted the rate would hold at 9.4 percent, according to the median of 14 estimates in a Bloomberg survey.

``This may be just a temporary situation,'' Carlos Cavalcanti, chief economist for the Center of Industries of Sao Paulo State, a business panel representing some of the country's biggest employers, said in an interview. ``The prospects for hiring are good.''

Cavalcanti predicts the jobless rate will fall to about 8 percent by June 2006.

Wal-Mart Stores Inc., the world's biggest retailer, plans to open as many as 18 stores in the state of Rio de Janeiro within the next five years. The expansion plan into Rio, also Brazil's third largest state by population, includes 4,500 job openings.

Brazil's economy has added more than 3.2 million jobs since President Luiz Inacio Lula da Silva took office in 2003, bringing the unemployment rate down from 13 percent in August of that year.

The economy will grow 3.3 percent this year and 3.5 percent next year, following a 4.9 percent expansion in 2004, according to a central bank weekly survey of about 100 financial institutions released on Oct. 25. That would make for the best three-year stretch of growth in Brazil since 1993-1995.

Source: Bloomberg.com - GAI


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