Brazil Recovery Gains Steam With Surprising Jobs, Budget Data

(Bloomberg) — Brazil surprised analysts with stronger-than-expected employment and budget numbers for October, a sign that the economic recovery seen in the past few months is gaining speed in the beginning of the fourth quarter.

The country created a record 394,989 formal job positions last month, nearly twice as much as expected by economists in a Bloomberg survey. Economy Minister Paulo Guedes celebrated the result, saying the country could finish 2020 with no job losses despite the coronavirus pandemic.

“This only shows that the economy is bouncing back in V shape,” Guedes told reporters after the numbers were released.

chart: Job market and fiscal accounts point to economic recovery in October

© Bloomberg
Job market and fiscal accounts point to economic recovery in October

Meanwhile, the Treasury reported a primary deficit of only 3.6 billion reais ($680 million) for October, way lower than the 20 billion reais expected by analysts and following a large gap of 76.2 billion reais in September.


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The budget surprise came on the heels of an economic recovery that has boosted tax collection at the same time as the government reduced cash handouts given during the pandemic. Companies that benefited from tax exemptions in the past few months also resumed paying them in October.

“The economic recovery played an important role in October’s result,” Treasury Secretary Bruno Funchal said at a news conference following the release of the data.

Latin America’s largest economy has started recovering in the third quarter, with the central bank’s economic activity index, considered a proxy for GDP, rising 9.47% from the previous three months. Yet the government is far from achieving a comfortable fiscal position — its 2020 budget deficit is estimated at 844 billion reais, or 11.7% of gross domestic product.

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