Brazilian companies shed jobs in October for the first time in at least 15 years, revealing the delicate state of the economy ahead of potential tax hikes and renewed government austerity. Brazil's economy trimmed 30,283 net payroll jobs in October, the worst result for the month since the current data series began in 1999, labor ministry data showed on Friday.
Latin America's largest economy was expected to have added 56,000 payroll jobs in October, according to the median forecast of five economists. Brazil added 123,785 jobs in September. The October job cuts were widespread but more common among builders and manufacturers. Retailers did not pick up the slack despite preparations for the holiday shopping season, hiring about half as many people as in the same month a year earlier.
The numbers foretell a likely increase in the joblessness rate, a potential blow for newly re-elected President Dilma Rousseff. She has pledged to shore up government finances and reduce inflation without sending unemployment up. Economists say Brazil faces years of weak growth and have called for steep budget cuts, and tax and interest rate hikes, to prevent government debt from rising further. Ratings agencies have warned of potential debt downgrades next year, which could reduce capital flows into the country.
Many of Brazil's homebuilders, carmakers and retailers such as GPA SA have already been cutting jobs since earlier this year to reduce costs and protect profits. They have been careful to avoid mass layoffs though. Brazil's economy has added 912,287 jobs from January to October, mostly unskilled, low-paid posts in services companies.
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