UPDATE 2-Brazil's jobless at record low despite weakened economy
* Unemployment dropped to 4.6 percent at end of 2012 * Separate data show payroll job growth is slowing * Real wages fell 0.9 pct in December from November By Silvio Cascione SAO PAULO, Jan 31 (Reuters) - Brazil's unemployment rate dropped to a record low in December as expected, underpinning a timid economic recovery and renewing concerns about inflation. The jobless rate fell to a non-seasonally-adjusted 4.6 percent from 4.9 percent in November, government statistics agency IBGE said on Thursday. December's unemployment rate was above the median forecast of 4.4 percent in a Reuters survey of 27 economists. Nevertheless, it was the lowest reading for the indicator since the current data series was introduced in 2002. In December 2011, Brazil's jobless rate was 4.7 percent. A strong labor market is crucial for Brazil's ambitions to at least triple its growth rate from a mediocre 1.0 percent estimated for last year. But the tight supply of workers in some areas has also fuelled inflation, creating a dilemma for the central bank as it tries to keep interest rates at record lows. "The economy will only recover if consumer spending keeps growing, and that depends on employment, income and confidence," said Mauro Schneider, an economist at CGD Securities in Sao Paulo. "Right now, we have good prospects for the first two." "But the number also means that we shouldn't see services inflation slowing," Schneider said. Services inflation rose more than 8 percent last year, way above the headline inflation rate of 5.8 percent, according to the IPCA benchmark index. The central bank cut interest rates ten straight times until October 2011 to jump-start the economy, but has faced growing criticism as inflation drifts towards the top-end of its target at 6.5 percent. Most economists still expect the benchmark interest rate to remain stable this year, at 7.25 percent. Unemployment dropped even after payroll job growth declined to its slowest pace since 2003. Last Friday, the labor ministry said 1.3 million jobs were added last year. Its data showed that Brazilian employers shed a more-than-expected 497,000 jobs in December. Taken together, both the Reuters poll and government data suggest that the pace of payroll job creation in 2012, albeit slower, offset the entry of new workers in the labor market. The labor ministry forecasts that 2 million new jobs will be created this year as the economy picks up steam. Analysts also say that different methodologies help explain the contrast between both surveys. The unemployment rate, as calculated by the IBGE, tallies jobs in the formal sector, where employers are legally registered, as well as off-the books jobs in the so-called informal sector. On the other hand, the labor ministry's nationwide payroll collection is based on a survey of only legally registered, or "formal sector," employers. The IBGE report showed that the number of Brazilians with jobs in the six major metropolitan areas remained practically unchanged from November at 23.4 million people, up 3.1 percent from a year earlier. The number of people who unsuccessfully looked for work fell 6 percent from November and remained unchanged from a year earlier at 1.1 million. The report also showed some signs of moderation in the job market, though. Real wages, or salaries discounted for inflation, fell 0.9 percent from November to an average of 1,805.00 reais ($912) a month. They rose 3.2 percent from the year-earlier period.
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