MercoPress. South Atlantic News Agency

Good news for president Lula da Silva.

Employment and direct foreign investment increased during June in Brazil indicating a possible strong rebound of domestic demand. According to the latest release from the Brazilian Geography and Statistics Institute, IBGE, unemployment in June drooped to 11,7%, half a point compared to May and the second month running it has contracted.

"This is the lowest unemployment index in five months and this is indicating a recovery of the labor market", said Cimar Pereira from IBGE.

However 2,5 million people in Brazil's six main metropolitan areas are out of a job and the average worker's monthly income is equivalent to 295 US dollars.

The Brazilian Central Bank also had encouraging news: direct foreign investment last June reached 737 million US dollars, three times the May figure which was the lowest in eleven months.

The June 2004 direct foreign investment figure is also well above June 2003 which was a dismal 186 million US dollars.

"June foreign sector figures indicate a return of financial flows to Brazil, we're recovering, and this year prospects are for a higher foreign investment meaning the situation has began to reverse", said Altamir Lopes from the Central Bank.

Direct foreign investment in Brazil reached 4 billion US dollars in the first half of 2004 compared to 3,5 billion in the same period of 2003.

Mr. Lopes added that Brazil expects to end the current year with foreign direct investment reaching 12 billion US dollars compared to 10,1 billion last year.

But Brazil still has a steep road ahead compared to previous years: in 2000 foreign direct investment was 32,7 billion US dollars; in 2001 22,45 billion and in 2002, 16,6 billion.

The Central Bank indicated another positive index: during June Brazil managed a current account surplus equivalent to 2,06 billion US dollars mainly because of a trade surplus of 3,8 billion US dollars, with June exports totaling 9,3 billion US dollars.