Brazil's motor-vehicle sales in the first 10 months of the year rose 11.7 percent from the same period last year, helped by lower interest rates and a recovering economy, the industry's main trade group said onFriday.

The industry notched up 1.26 million new registrations of cars, trucks and buses between January and the end of October, said the National Association of Vehicle Manufacturers (Anfavea). It also produced 1.82 million vehicles during the period, 21 percent more than a year earlier.

The association said the number of people employed in the sector in Brazil had hit the 100,000 mark again, a level not seen since the start of 2002 when the center-left government of President Luiz Inacio Lula da Silva took office.

"That creates a degree of self-sustainability in the (economic) process. You generate income, income fuels consumption and creates more income, which in turn generates growth," said Jankiel Santos, an economist at ABN Amro Real in Sao Paulo.

The industry employed 90,800 people in December last year after a round of job cuts as the sector wallowed in the fallout of high interest rates and an economic slowdown.

Despite the strong year-on-year comparisons, Anfavea said the sector sold 136,900 vehicles in October, a 0.6 percent drop from September. Production also fell 6 percent to 191,000 vehicles compared with the previous month.

Exports, hit in September by logistics problems, bounced back in October. The association said the sector exported 62,500 vehicles in the month, 8.6 percent more than in September.

Brazil's economy is expected to grow more than 4 percent this year, after shrinking 0.2 percent in 2003, thanks to a series of central bank interest rate cuts.

Although Brazil's central bank has raised its main Selic interest rate by three-quarters of one percentage point over the last two months to 16.75 percent, the lending rate remains significantly lower than last year's high of 26.5 percent.

(From Reuters, November 05, 2004)

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