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Brazil’s Economy Cools Down After 9% Annual Rate Expansion

São Paulo street For the third month in a row Brazil has reported in July slower job creation, reflecting the slowdown of the economy in the second quarter after a massive 9% year-on-year growth in the first quarter of the year. Traders say this increases the likelihood central bank policy makers may leave interest rates unchanged in their next meeting. 

The Ministry of Labor said that the Brazilian economy added 181,796 government registered jobs last month, the smallest number since January. Job creation figures show companies are adjusting their payrolls more cautiously after strong hiring in the beginning of the year, Labor Minister Carlos Lupi said in Brasília.

“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% annual rate in the first quarter, the fastest pace in 15 years. Last year, Brazil generated almost a million registered jobs.

Traders are reducing bets on rate increases after central bank president Henrique Meirelles said August 16 that inflation expectations are “around” the central bank’s target rate of 4.5% for next year, fueling speculation that policy makers will stop raising borrowing costs.

Annual inflation slowed to 4.6 percent in July, the lowest level in six months.

Economists’ median growth forecasts have fallen to 7.09% for 2010, down from 7.2% four weeks previously, according to a central bank survey of about 100 economists. The central bank raised the benchmark lending rate, known as the Selic, by a half-point to 10.75% in July.



  • Show Comments (5)

  • Andrade

    [quote]Not at all, not at all[/quote]

    [quote]And how will your government pay and rather well all these new Government employees ?
    Simple : either by raising taxes further, or by more budget deficitsssss ! Or both ! [/quote]

    Thanks for the analysis, sir and I appreciate it. Raising taxes? I read it is already in the agenda of the next President. I am sure you know the old CPMF will be back. But this time the percentage will be higher than the previous rate.:sad:

  • ch.c.

    Not at all, not at all
    Because pay attention again

    1) the 181 K jobs in January were Government New jobs in an already bloated administration. Thus it is the government which is pumping new jobs….to pump the numbers….in view of the elections ! SIMPLE

    2) the economy created 212,952 registered jobs in June and 298,041 in May. What is not said, on purpose to hide the truth, is that most of these new jobs were created in the state controlled companies !

    3) THEN…..MAKE a vague estimate of government + economy.. new jobs, and you arrive EASILY at well over 3 millions NEW JOBS for WHOLE 2010 ! Hmmmmm….continue reading
    4) You have about 24 millions registered workers in the economy, and about 12 millions in the various government sectors. NAMELY 1 job in the government sector and 2 jobs in the economy.
    Or stated other wise, one third of workers in the governments administrations.
    Wellllll….this is exactly the same ratio as in GREECE !

    And how will your government pay and rather well all these new Government employees ?
    Simple : either by raising taxes further, or by more budget deficitsssss ! Or both !

    After the elections tighten your belt. You too will be on a diet !
    Before the elections the name of the game was hire, hire, hire…to win the elections !
    Hire in the governments sectors and Hire in the State controlled companies of course !

    Thus from an Already overbloated employees in the government sectors and an overbloated employees in the state controlled companies, NOW BOTH ARE DOUBLE OVERBLOATED !


  • Andrade

    Are you 100000000 % sure that there are not some rightist reactionary groups in the Ministry of labor which are trying to tarnish the image of our President by misquoting his official stats? Our economy cant cool down overnight.

  • ch.c.

    Pure lie spread by the opposition parties ??????
    Sorry sorry the Ministry of Labor is not run by the Opposition Parties, until proven otherwise. But always by the ACTUAL governing party or its allied parties, not by the opposition !

    But feel free to be 100000000 % sure of your Idioty certainty !

  • Andrade

    [quote]Brazil’s Economy Cools Down After 9% Annual Rate Expansion[/quote]

    Pure lie spread by the opposition parties.

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