UPDATE 1-Brazil's September auto output rises but job cuts continue

(Adds details of employment, political context, sales by brand)

SAO PAULO, Oct 6 (Reuters) - Brazil’s automobile production recovered in September to its strongest in 11 months but carmakers kept cutting jobs as weak sales showed little sign of reversing a year-long slump.

Output rose 13.7 percent and sales rose 8.7 percent in September from August, boosted by an extra working day in the month, the national automakers’ association Anfavea said on Monday.

But tighter credit and plunging consumer confidence continued to dampen demand, reducing sales 4.4 percent in September from a year earlier and contributing to a 9.1 percent drop in sales during the first nine months of the year.

Production dropped 6.7 percent last month from a year earlier and is down 16.8 percent through September this year.

Carmakers have been trimming payrolls to adjust to the tougher environment, offering furloughs and voluntary buyouts to avoid upsetting the government. President Dilma Rousseff has offered the industry tax breaks in return for avoiding layoffs as she aims to maintain record-low unemployment, a key pillar of her campaign for re-election this month.

Employment in Brazil’s auto industry fell in September, the 11th month in row, and is now 6.6 percent lower than a year ago.

Brazil is a major market for global carmakers with local operations such as Italy’s Fiat SpA, Germany’s Volkswagen AG and U.S.-based General Motors Co and Ford Motor Co.

Fiat remained Brazil’s top seller of cars and light trucks in September, with over 59,200 new registrations. GM stole second place from VW, selling nearly 49,800 passenger vehicles compared to about 46,600 cars and light trucks sold by its German rival. Ford sold around 25,100 vehicles.

Overall, automakers in Brazil produced about 300,800 new cars, trucks and buses last month, while sales totaled around 296,300 vehicles, according to data released by Anfavea. (Writing and additional reporting by Brad Haynes; Editing by Chizu Nomiyama and James Dalgleish)