(Recasts, adds context and economist comment)

BRASILIA (Reuters) - Brazil's economy created arecord number of payroll jobs for the month of August in a signthat it is growing at a solid pace.

Latin America's largest economy added a net 299,415 payrolljobs last month, the Labor Ministry saidThursday, the eighth straight month of increases.

Job creation for September, October and November shouldalso reach a record, said Labor Minister Carlos Lupi.

"It shows economic activity is still strong," Ures Fulkiniat the Treasury desk at WestLB in Sao Paulo said.

The numbers come as expectations for growth this year andbets on inflation for 2011 continue to rise, even as thecentral bank has sounded dovish in recent months and lookspoised to keep interest rates steady at 10.75 percent for sometime.

The economy created 1.95 million jobs so far this year,according to the ministry, with Lupi reiterating 2.5 millionjobs will have been created by December.

Brazil has proven a global bright spot this year, with theeconomy growing at a brisk pace even as more developed nationsstruggle with an uneven recovery.

But despite stronger-than-expected growth in the secondquarter, the central bank ended its monetary tightening cyclethis month, citing a benign inflation outlook.

Analysts in a weekly central bank survey have sinceincreased their expectations for 2010 growth to 7.42 from 7.34percent in the latest weekly central bank survey, and raisedtheir bets for 2011 inflation to 4.9 from 4.85 percent.

The government has an inflation target of 4.5 percent, plusor minus 2 percentage points.

While inflation pressures remain under control, someanalysts worry about future price pressures.

"The central bank is going to have to be a little morevigilant," Fulkini added.

President Luiz Inacio Lula da Silva has made it a priorityto increase payroll jobs. Most of Brazil's workforce is notregistered with the Labor Ministry and belongs to a vastinformal economy. (Reporting by Isabel Versiani; Writing by Ana Nicolaci daCosta; Editing by James Dalgleish)