UPDATE 2-Brazil's jobless rate unexpectedly falls in July

* Unemployment unexpectedly falls to 8 pct in July

* Jobless rate falls for fourth straight month

* Real wages rise 0.5 pct from June, up 3.4 pct on year (Adds IBGE, economist comments, rate futures, byline)

By Elzio Barreto

SAO PAULO, Aug 20 (Reuters) - Unemployment in Brazil unexpectedly fell in July and was down for a fourth straight month, the latest sign that a recovery in Latin America's largest economy is gaining traction.

Real wages rose for the first time in six months, underscoring expectations of sustained consumer spending in the months ahead that would stoke Brazil's manufacturing sector.

"It's a positive sign for the economy, indicating that activity is recovering, though at a slow pace," said Maristella Ansanelli, chief economist at Banco Fibra in Sao Paulo.

The jobless rate BRUNR=ECI edged lower to 8 percent in July from 8.1 percent in June, statistics agency IBGE said on Thursday.

The unemployment rate had been expected to rise to 8.3 percent, according to the median forecast of 30 economists surveyed by Reuters. Estimates ranged from 7.8 to 8.9 percent.

Most of the decline in the unemployment rate in past months was due to a slump in the number of people looking for jobs, but the July numbers showed a stronger recovery of Brazilians with jobs.

The number of people working in the six metropolitan areas surveyed by IBGE firmed 0.9 percent from June to 21.33 million. Compared to July 2008, the number of Brazilians with jobs rose 1.1 percent.

The tally of people looking but unable to find work fell 0.7 percent both from June and from July 2008 to 1.85 million. That figure had slumped 8.3 percent in June from May.

"We continue in a process of recovery. The figures show there is a significant improvement in the labor market," said Cimar Azevedo, an IBGE economist in charge of the monthly labor market survey.

Yields on interest rate futures contracts rose <0#DIJ:> after the release of the unemployment data, with the contract for Jan. 2011 DIJF1 delivery, the most widely traded at the BM&F Bovespa, up to 9.57 percent from 9.54 percent on Wednesday. The January 2012 contract DIJF2 climbed to 10.91 percent from 10.86 percent the previous session.

Average monthly household income, or family earnings discounted for inflation, rose 0.5 percent in July from June to 1,323.3 reais ($720.35), after declining every month since January. Income, a measure of workers' purchasing power in Latin America's largest economy, rose 3.4 percent from a year earlier, the IBGE said.

"This gives support to the retail market," Ansanelli said. "Consumption is rising much faster than investments because of the conditions in the labor market, the number of jobs and salaries." ($1=1.837 reais)

For the IBGE's July jobless report, see: here (Additional reporting by Brian Ellsworth; Editing by Andrea Ricci)