Brazil created more jobs than analysts forecast in January

Brazil’s economy created more jobs than analysts expected in January, adding to evidence economic growth rebounded after slowing in the third quarter.

Latin America’s biggest economy generated 118,895 jobs last month, the Labor Department said today in a report. The median estimate of 19 analysts surveyed by Bloomberg was for 100,000 extra jobs. A year earlier the economy generated 152,091 jobs.

Since August, President Dilma Rousseff’s administration has lowered borrowing costs, cut taxes on goods and investments and pledged to boost public works to ensure 4.5 percent economic growth this year. The central bank said last month there is a “high probability” the benchmark interest rate will be reduced to less than 10 percent from 10.50 percent this year without jeopardizing the goal of bringing inflation back to the midpoint of its target range.

The jobs figure “shows the economy remains strong,” Newton Rosa, chief economist at SulAmerica Investimentos, said in a phone interview from Sao Paulo. “The labor market continues to be one of the biggest risks for the central bank’s inflation outlook.”

The yield on interest rate future contracts maturing in January 2014, the most traded in Sao Paulo today, rose six basis points to 9.68 percent at 12:08 p.m. local time.

Slowest Growth

Brazil’s economic activity index, a proxy for gross domestic product, rose 2.7 percent in 2011, the central bank said last week. Should GDP show a similar reading, it would be the slowest growth in eight years, apart from 2009 when the economy contracted in the wake of the global financial crisis sparked by the 2008 bankruptcy of Lehman Brothers Holdings Inc.

Inflation will slow to 4.5 percent this year from 6.22 percent in January, Carlos Hamilton, the central bank’s economic policy director said Feb. 10. The bank targets inflation of 4.5 percent plus or minus two percentage points.

Unemployment fell to a record low 4.7 percent in December before rising to 5.5 percent in January, the national statistics agency said Feb. 17. Still, joblessness remained at a record low for January, signaling the economy is near full employment.

The government-registered job creation number is a balance of posts created minus job eliminated. Registered jobs, so- called formal work, assure employees a range of benefits such as unemployment insurance, bonuses and retirement payments by the government.