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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (45291)	1/26/2006 2:44:17 PM
From: shades	Respond to of 116555

=DJ UPDATE: Plunging Brazil Unemployment A Political Plus . (Updates with comments from analysts.) By Bernd Radowitz and Tom Murphy Of DOW JONES NEWSWIRES RIO DE JANEIRO (Dow Jones)--Brazil's official jobless rate in December fell to 8.3% from 9.6% in November, an abrupt decline that should produce political dividends for Brazilian President Luiz Inacio Lula da Silva, who is seeking reelection this year. "The October election is going to turn on the economy," said Antonio Augusto de Queiroz, a political risk analyst at the DIAP Consulting Group in the nation's capital of Brasilia. "Of all the economic variables, the one with the greatest political impact is the unemployment figure." The rate fell for the first time in December after staying flat for three months, according to the Brazilian Census Bureau, or IBGE, on Thursday. It was the lowest jobless rate since March, 2002, when the government last changed the methodology of its unemployment statistics, the IBGE said. The December rate also compared favorably with December, 2004 unemployment of 9.6%. The rate came in at the lower end of analysts' expectations. Fourteen Analysts polled by the Estado newswire had foreseen a rate between 8% and 9.3%. But, according to some economists, the rate may have been too good to be true. "It's way off the curve," said Jason Vieira, an economist for the Global Invest Consulting Group in Sao Paulo, Brazil's financial capital. "These figures have to give you pause. I wouldn't be surprised if the IBGE revises them when they report the January figures." Therefore, according to Vieira, "Other economic variables, for now, do not change. This figure does not represent a trend until we see more evidence of a lasting decline in joblessness." Brazil's "other economic variables," at the moment, are positive but only modestly so. According to a survey of 100 financial market analysts conducted by the Brazilian Central Bank, and released Monday, expectations for 2006 economic expansion are a modest 3.5%, following a mere 2.3% in 2005. Inflation will decline slightly to 4.61% from the 2005 level of 5.69%. The December rate may also represent an aberration because of seasonal factors, said Vieira. Brazil's unemployment rate usually falls toward the end of the year as retailers temporarily hire staff for year-end sales. Other purely statistical factors may also have played a role. According to the IBGE, much of the reduction in the unemployment rate in December probably came as fewer people were actively seeking jobs. According to Thursday's IBGE release, in December, 20.2 million people held fully registered jobs, up only slightly from 20.1 million in November. The unemployment rate isn't fully comparable with jobless rates in developed countries, since in Brazil a large part of the population is either underemployed or works in the informal sector. Workers not actively seeking a job in the month prior to the survey don't count as unemployed, according to the IBGE methodology. -By Bernd Radowitz and Tom Murphy, Dow Jones Newswires; (5511) 3145-1478; brazil@dowjones.com