(Adds data, background)
BRASILIA, Feb 16 (Reuters) - Economic activity in Brazil fell for the eighth straight quarter at the end of 2016, capping the second year of a severe recession, central bank data showed on Thursday.
It shrank 0.36 percent in the fourth quarter from the third after seasonal adjustments following a 0.39 percent fall in the previous quarter, according to the central bank's IBC-Br index, considered an advance indicator of gross domestic product data.
Activity fell 0.26 percent in December from November after an increase of 0.10 percent in the previous month.
In 2016, economic activity plunged 4.55 percent following a drop of 4.07 percent in the prior year, the bank said.
The IBC-Br index measures activity in agriculture, industry and services.
Economists expect Brazil to begin a slow recovery in 2017 with the central bank forecast to slash interest rates.
More than 12 million Brazilians are unemployed, and scores of companies have filed for bankruptcy protection, denting the popularity of President Michel Temer.
Statistics agency IBGE will release fourth-quarter GDP data on March 7. (Reporting by Silvio Cascione; Editing by Toby Chopra and W Simon)