SAO PAULO, Dec 19 (Reuters) - Brazil's jobless rate returned to record lows in November, and inflation accelerated, government data showed on Thursday, suggesting consumer spending remained steady despite several interest rate increases and a sharp economic slowdown.
The data also pointed to stronger price pressures ahead, challenging the central bank as it approaches the end of an aggressive cycle of rate hikes.
Brazil's nonseasonally adjusted jobless rate fell to a record low of 4.6 percent in November, below all 25 forecasts in a Reuters poll, while wage gains picked up speed.
Inflation measured by the IPCA-15 consumer price index rose 5.85 percent in the 12 months to mid-December, above the 5.74 percent median forecast in a Reuters poll and the 4.5 percent midpoint of the official target range.
"The central bank wanted to deliver a lower inflation rate this year, but it is very likely that it will be higher or very close to last year's rate," said Rosenberg & Associados economist Fernando Parmagnani. Inflation ended 2012 at 5.84 percent and climbed as high as 6.7 percent in June.
As expectations for several years ahead shot up, the central bank raised its benchmark Selic lending rate from record lows to 10 percent, the highest among the world's major economies.
In the month to mid-December, inflation was led by a steep increase in airfare as families booked holiday travel. Services prices also jumped as workers started to receive their legally mandated Christmas bonuses.
Real wages, or salaries discounted for inflation, rose 3.0 percent from a year earlier to an average of 1,965.20 reais ($836) a month. In October, salaries had gained 1.8 percent.
Household consumption was one of Brazil's few growth engines in the third quarter, when the economy contracted for the first time since 2009. Leading indicators of credit demand had pointed to a cooldown in consumer spending in November, but a separate report by the central bank showed an increase in consumer credit last month.
SMALLER JOB MARKET?
Economists said the drop in the unemploywment rate was not due to strong job creation, but rather to a decline in the number of people looking for work as more Brazilians opt to dedicate more time to education and training.This may change next year as the economy struggles, they said.
"The labor market is not strong; it seems to be losing momentum," said Rafael Bacciotti, an economist with research firm Tendencias Consultoria in Sao Paulo.
"The only positive thing in today's release was the wage gains." In November, the number of people who failed to find work in Brazil's six largest metropolitan cities dropped 10.9 percent from October, to 1.1 million. Brazil last notched 4.6 percent unemployment in December 2012.
That level was the lowest since 2002, when the statistics agency IBGE began using a new methodology to tally employment and jobless data. On a month-to-month basis, inflation edged up 0.75 percent from 0.57. Economists had expected a 0.65 percent rise, according to the Reuters poll.
The average of Brazil's main core inflation measures increased to 0.64 percent from 0.53 percent, according to economists' calculations.
The so-called diffusion index, which measures the number of goods and services that had price increases, dropped to 70.1 percent from 70.7 percent in mid-November, but remained above its historical average.
"High core and services inflation, coupled with strong readings in the diffusion index, continue to suggest no relief in the inflation outlook," Barclays economists Marcelo Salomon and Bruno Rovai said in a research note.
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The data also pointed to stronger price pressures ahead, challenging the central bank as it approaches the end of an aggressive cycle of rate hikes.
Brazil's nonseasonally adjusted jobless rate fell to a record low of 4.6 percent in November, below all 25 forecasts in a Reuters poll, while wage gains picked up speed.
Inflation measured by the IPCA-15 consumer price index rose 5.85 percent in the 12 months to mid-December, above the 5.74 percent median forecast in a Reuters poll and the 4.5 percent midpoint of the official target range.
"The central bank wanted to deliver a lower inflation rate this year, but it is very likely that it will be higher or very close to last year's rate," said Rosenberg & Associados economist Fernando Parmagnani. Inflation ended 2012 at 5.84 percent and climbed as high as 6.7 percent in June.
As expectations for several years ahead shot up, the central bank raised its benchmark Selic lending rate from record lows to 10 percent, the highest among the world's major economies.
In the month to mid-December, inflation was led by a steep increase in airfare as families booked holiday travel. Services prices also jumped as workers started to receive their legally mandated Christmas bonuses.
Real wages, or salaries discounted for inflation, rose 3.0 percent from a year earlier to an average of 1,965.20 reais ($836) a month. In October, salaries had gained 1.8 percent.
Household consumption was one of Brazil's few growth engines in the third quarter, when the economy contracted for the first time since 2009. Leading indicators of credit demand had pointed to a cooldown in consumer spending in November, but a separate report by the central bank showed an increase in consumer credit last month.
SMALLER JOB MARKET?
Economists said the drop in the unemploywment rate was not due to strong job creation, but rather to a decline in the number of people looking for work as more Brazilians opt to dedicate more time to education and training.This may change next year as the economy struggles, they said.
"The labor market is not strong; it seems to be losing momentum," said Rafael Bacciotti, an economist with research firm Tendencias Consultoria in Sao Paulo.
"The only positive thing in today's release was the wage gains." In November, the number of people who failed to find work in Brazil's six largest metropolitan cities dropped 10.9 percent from October, to 1.1 million. Brazil last notched 4.6 percent unemployment in December 2012.
That level was the lowest since 2002, when the statistics agency IBGE began using a new methodology to tally employment and jobless data. On a month-to-month basis, inflation edged up 0.75 percent from 0.57. Economists had expected a 0.65 percent rise, according to the Reuters poll.
The average of Brazil's main core inflation measures increased to 0.64 percent from 0.53 percent, according to economists' calculations.
The so-called diffusion index, which measures the number of goods and services that had price increases, dropped to 70.1 percent from 70.7 percent in mid-November, but remained above its historical average.
"High core and services inflation, coupled with strong readings in the diffusion index, continue to suggest no relief in the inflation outlook," Barclays economists Marcelo Salomon and Bruno Rovai said in a research note.
yahoo.com
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