* HSBC PMI falls to 51.1 from 52.2 in November
* New export orders increase for first time in 21 months
By Asher Levine
SAO PAULO, Jan 2 (Reuters) - Brazil's manufacturing expanded at a slower pace in December compared with the previous month, a private survey showed on Wednesday, suggesting that a recovery in the beleaguered industrial sector remains tenuous.
The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector fell to a seasonally-adjusted 51.1 in December from 52.2 in November, yet remained above the 50 mark that divides expansion from contraction, for the third straight month.
New orders fell to 52.3 in December, down from 54.4 in November but still better than any other month of the year as companies reported stronger demand, with new export orders expanding for the first time since March 2011.
The report compiled by Markit adds to evidence that government stimulus and tax breaks, along with an improvement in the global economy, is slowly lifting Brazilian manufacturers, who have struggled recently with a tight labor market and weak demand from abroad.
President Dilma Rousseff's government extended some stimulus measures last month in an effort to squeeze more growth out of Latin America's biggest economy, widely expected to expand by only 1 percent this year at best.
The level of employment in the manufacturing sector was little changed in December, according to the PMI survey. Brazil posted a 4.9 percent unemployment rate in November, near an all-time low.
Inventories of finished products decreased slightly, reversing a small increase in November. Prices of finished goods rose for the tenth straight month, with survey participants citing higher input costs and unfavorable exchange rate conditions.
Brazil's statistics agency IBGE will release official industrial output numbers for the month of November on Jan. 4.