(Recast, adds historical data and context)
BRASILIA, Dec 15 (Reuters) - Economic activity in Brazil declined in October for the fourth straight month, shattering expectations that Latin America's No. 1 economy would soon begin to emerge from the harshest recession in eight decades.
The IBC-Br index, which takes the pulse of the agricultural, industrial and service sectors, fell 0.48 percent from September, central bank data showed on Thursday. Analysts expected a 0.50 percent drop.
The deepening recession and allegations of corruption against President Michel Temer and other senior politicians have rekindled political instability in Brazil only four months after the impeachment of his predecessor, Dilma Rousseff.
"We expect the economy to continue to face headwinds from exigent financing conditions, a weak labor market, high levels of household indebtedness, weak external demand, contained consumer and business confidence amidst growing political uncertainty," said Alberto Ramos, chief Latin America economist with Goldman Sachs Group Inc.
Temer plans later on Thursday to announce measures to ease the debt of businesses and consumers in an attempt to breathe some life into the second-largest emerging market economy.
The drop in October was the eighth in 10 months. With the recession in its second year, millions of Brazilians have lost their jobs, and scores of companies have filed for bankruptcy protection. (Reporting by Alonso Soto; Editing by Angus MacSwan)