Brazil's unemployment rate fell in December for the first time in six months, slipping to 8.3 percent as seasonal holiday hiring offset a sluggish economy, the government said Thursday.

The result, the lowest since March 2002, marked the second straight year that the jobless rate has fallen in Brazil, South America's largest economy, and offered some good news for President Luiz Inacio Lula da Silva as he struggles regain lost popularity for a possible re-election bid later this year.

After falling to 9.6 percent in December 2004, the unemployment rate peaked at 10.8 percent in March and April of last year. It then fell to a low of 9.4 percent between June and August, before edging up in September to 9.6 percent, where it remained through November.

The December result, issued by the government's statistics agency IBGE, was well below market expectations of a jobless rate of 9 percent, according to the median forecast of seven investment banks. Estimates ranged from 8 percent to 9.6 percent.

The average unemployment rate in 2005 was 9.8 percent, down from an average of 11.5 percent in 2004, the IBGE said.

The uptick in the labor market comes as Brazil's economy is struggling to rebound from a slump in the third quarter, when gross domestic product shrank 1.2 percent from the previous quarter, the first contraction in two years.

Real wages -- which are discounted for inflation -- edged up 1.8 percent in December from November to an average of 995.40 reais ($444.37) a month, the IBGE said.

In the six metropolitan areas surveyed last month, some 40.9 percent of workers had formal private sector jobs with benefits. About 15.4 percent had no pension and health care benefits, while 19.3 percent of workers were self-employed.

The survey does not cover Brazil's vast agricultural interior, which is often referred to as the "green anchor" of the economy and has been creating jobs at a faster pace than urban areas in recent years.

(Published Reuters, January 26, 2006)
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