SAO PAULO: Brazil's unemployment rate likely fell slightly in June despite weak job creation during the month, a Reuters poll showed on Tuesday, suggesting the country's domestic market remains poised to support an economic rebound in the second half of the year.
Brazil's jobless rate probably edged down to 5.7 percent in June on a non-seasonally adjusted basis, from 5.8 percent in the prior month, according to the median forecast of 23 analysts.
That would be the lowest rate for the month since the current data series was introduced in 2001. It would also remain close to an all-time low of 4.7 percent hit in December.
The unemployment report, to be published on Thursday, will likely restore some confidence in Brazil's job market after data showed the largest Latin American economy added a net 120,400 payroll jobs in June, the lowest for the month since 2009 and below market expectations.
"The job market still supports the economy," said Luciano Rostagno, chief economist for WestLB, in São Paulo. "The labor market may cool down a bit this year, but nothing very sharp, with unemployment still at very low levels."
Brazil's buoyant services sector has helped shield the country's job market from an abrupt contraction in manufacturing, which has been struggling with a recent global slowdown and high costs at home.
Low unemployment and steadily rising wages have kept consumer confidence near record highs, setting the stage for a broad economic recovery in coming months after the central bank cut interest rates to all-time lows.
The world's sixth-largest economy is expected to grow 3.3 percent in the fourth quarter from the same period a year before, up from a projected 0.8 percent expansion in the second quarter, another Reuters poll showed.
A negative surprise in unemployment, on the other hand, may ring alarm bells within the government and possibly spell further rate cuts ahead.
Brazil's President Dilma Rousseff is already "very worried" about Brazil's chances for a meaningful recovery this year and is pushing ahead with measures aimed at lowering taxes and increasing investment, government officials told Reuters.
The central bank is expected to slash its benchmark Selic interest rate to 7.5 percent in August and hold rates at that level until at least 2013, according to the Reuters poll.
"As we discuss the next monetary policy moves, high-frequency economic indicators such as this one gain relevance," Maurício Molan, chief economist for Santander in Brazil, wrote in a research note.
"We expect the unemployment rate to gradually return to 6 percent, reflecting the economic slowdown in the past two years. But that level shouldn't hamper consumption," Molan added.
Estimates for the rate ranged from 5.1 to 5.8 percent. Brazil's unemployment rate is taken from a survey conducted in six of Brazil's largest urban areas.
Brazil's statistics agency IBGE will release the official unemployment data for June on Thursday at 9 a.m. (1200 GMT).
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