Brazil loses 1M jobs in 12 months

By Ben Tavener

SAO PAULO

Brazil's economy slashed nearly 1 million payroll jobs in the last 12 months to September, according to figures released Friday by the Ministry of Labor and Employment.

The numbers show Brazil's economy shed a higher-than-expected 86,543 formal jobs in August -- the worst result for the month since 1995, according to the ministry. The figure was less than in July when 158,000 jobs were lost.

It means a total of 985,669 were lost in the past 12 months.

The sector hardest hit in August was industry, which accounted for nearly 48,000 cut positions, with civil construction and commerce also badly affected.

Brazil recently entered what is expected to be a prolonged economic downturn. The first two quarters of 2015 saw negative growth, signaling a technical recession.

The government said Tuesday it expected the country’s GDP to shrink by 2.44 percent this year, still better than the most recent market estimates of a 2.77 percent contraction, collated by the country's weekly central bank survey.

More negative growth is expected next year, albeit not as severe.

Low demand and growing stockpiles are weighing heavily on industry, as well as dwindling consumer confidence.

Brazil's economy has also been left reeling amid ongoing political uncertainty regarding the future of President Dilma Rousseff, Finance Minister Joaquim Levy, and the wider ruling coalition.

A sprawling corruption scandal at state-controlled oil firm Petrobras, Latin America's largest company, and cooler demand for Brazilian commodities from China, have also thrown cold water on a country once described as a "Latin powerhouse".

The political and economic crises have also been weighing on Brazil's currency which has lost around 50 percent of its value against the U.S. dollar in the past 12 months.

Thursday's session finally broke a succession of slumps for the real against the dollar, which broke through the four-real psychological barrier for the first time this week, closing at 4.05 reais Tuesday, and 4.14 reais Wednesday.

Several announcements of billion-dollar interventions by Brazil's central bank subsequently precipitated a 7 percent rally for the real -- the biggest since 2008 -- ending Thursday at 3.95 to the dollar, after reaching a new intraday record of 4.249.

Friday's session was still turbulent, but the real closed up 0.6 percent, with the dollar buying 3.97 reais.