Government Deficit Increases

Brazil's budget deficit widened in November as the government increased public spending and tax collection fell:

The deficit, including federal and local governments and state companies, widened to 6.52 billion reais ($3.03 billion) last month from 2.79 billion reais in October, according to a report distributed in Brasilia today.

The federal government transferred more cash to state governments in November to pay salaries and social benefits, said Altamir Lopes, head of the central bank's economic research department. The increase doesn't threaten the government's targets, he said.

``The higher costs won't stop us from reaching the fiscal targets for the year,'' Lopes told reporters in Brasilia.

The budget surplus before interest payments, known as the primary surplus, narrowed to 5.61 billion reais in November from 10.5 billion reais in October. That's more than the median forecast of 4.8 billion reais in a Bloomberg survey of 14 economists.

Brazil's President Luiz Inacio Lula da Silva has pledged to post a primary surplus -- the surplus before debt payments -- of 4.25 percent of gross domestic product this year.

Brazil's net debt as a percentage of gross domestic product fell in November to 49.3 percent from 49.5 percent in October.

November Unemployment Falls

From Bloomberg:

Brazil's unemployment rate fell to 9.5 percent in November, the lowest rate in 10 months, the national statistics agency said.

Unemployment in Brazil's six largest metropolitan areas declined from 9.8 percent in October, the Rio de Janeiro-based agency said in a statement today. The rate was less than the median forecast of 9.7 percent in a Bloomberg survey of 20 economists. The jobless rate was 9.6 percent in November 2005.

Household monthly income, adjusted for inflation, rose 5.7 percent from the same month of last year to 1,056.60 reais ($489), the agency said. It increased 0.6 percent from October.

Industrial Output Rises 4.8 Percent in October

Brazil's industrial output rose 4.8 percent in October, which was the fastest pace in five months. It seems the impact of 12 interest rate cuts in a row are now beginning to filter down into the economy.

Output expanded 4.8 from the same month last year, compared with 1.3 percent rise in September, Brazil's National Statistics Agency said in Rio de Janeiro today. The increase was in line with the median 4.8 percent forecast in a Bloomberg survey of 21 economists.

``Recent economic reports, such as faster job creation in manufacturing, point to stronger industrial production in the fourth quarter and make me believe that the worst is over,'' Zeina Latif, an economist with ABN Amro Bank NV's Brazilian unit, said in a phone interview from Sao Paulo.

The central bank has slashed the benchmark lending rate 6.5 percentage points to 13.25 percent since September 2005 in a bid to bolster a flagging economic recovery. The lowest lending rates in at least two decades and the prospect of additional cuts in 2007 has begun to stoke consumer demand for goods such as cars, thus helping boost production, Latif said.

Registrations of new cars, sport utility vehicles and trucks made in Brazil and abroad rose 15 percent in November to 182,732, the highest level this year, after expanding 27 percent in October from a year earlier, the fastest pace in more than two years, according to the country's automakers association, known as Anfavea, in a report published today.

Manufacturing employment increased 3.3 percent in October from a year earlier, the fastest pace since in seven months, a Confederation of Brazilian Industry report said Dec. 5.