Brazil job creation plummets on abrupt economic slowdown

Payroll job growth in Brazil's economy plummeted in February from a year earlier, as a broad economic slowdown forced employers to slow hiring. Manufacturers, farmers and retailers added a net 150,600 payroll jobs in February, down 57 percent from a year earlier, the Labour Ministry said on Friday.
Economists said slumping industrial employment dragged on overall job creation, as local manufacturers struggle with a strong currency, a scarcity of skilled labour and an unwieldy tax burden. Industrial output contracted three times more than economists expected in January.
Brazil added 19,609 manufacturing jobs in February, a third of the manufacturing jobs created in the same month last year. Stagnating industry slowed economic growth to 2.7 percent last year, adding to concerns Brazil had become complacent after the economy expanded 7.5 percent in 2010. Critics say the government lacks the political will to address the taxes and weak infrastructure that are choking growth.
In the past 12 months, hirings exceeded dismissals by 1.724 million, down from 1.980 million at the end of last year. The payroll numbers are the latest confirmation that Brazil's economic recovery is progressing unevenly. While the government has trimmed interest rates and taxes to spur consumption, cost and wage inflation are preventing firms from hiring more workers in anticipation of recovering demand.
Brazil's unemployment is hovering above record lows and economists have said the country is running out of skilled workers to integrate into the formal economy. "We will likely continue to see creation below previous years in upcoming results," Fernanda Consorte, an economist with Santander in Sao Paulo wrote in an investor note. In seasonally adjusted terms, she said job creation has been around the same level since the middle of last year. "This stability of the (seasonally adjusted) data combined with the low unemployment rate reflects that there is no room to create new jobs at the same pace as in the recent past," she added.