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Brazil's unemployment rate rose to 9.6 percent in September from a three-year low of 9.4 percent in August, suggesting economic growth is slowing, official data showed on Wednesday.

Average inflation-adjusted wages were flat in September at 974 reais ($431) from August, levelling off after three straight monthly rises, the government's statistics agency, IBGE, said in its monthly employment data report.

Compared with September 2004, the jobless rate declined 1.3 percentage points, the IBGE said.

"This number surprised negatively," said Sandra Utsumi of BES Investimentos in Sao Paulo. "But it's not the start of a trend. Unemployment should stay around 9 percent to 9.5 percent during the next several months and this would still be well below the jobless rates of 2004."

Brazilian economic growth is widely expected to slow to about 3 percent this year from 4.9 percent last year - the fastest rate in a decade. The slower growth stems in part from nine interest rate rises the central bank made between September 2004 and May 2005 to curb inflation.

Prices have since stabilised and allowed the central bank to cut its benchmark interest rate twice in the past two months to 19 percent.

But those cuts likely won't boost growth for months and some economists expect flat or falling economic activity in the third quarter, which would reverse a string of positive quarterly growth results.

Copyright Reuters, 2005


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