Chile’s unemployment rate unexpectedly fell in the three months through June, cementing expectations that a tight labor market will put pressure on consumer prices this year.
Unemployment slid to 8.5 percent from 8.8 percent in the three months through May, the National Statistics Institute said today in Santiago. The median estimate of 11 economists surveyed by Bloomberg was for a rise in the rate to 8.9 percent. Chile’s peso strengthened.
South America’s fifth-largest economy had 544,750 more jobs in June than a year earlier, the institute said. Chile is set to close the year with 7.4 percent unemployment as the economy continues to recover from February’s earthquake and last year’s recession, said Alejandro Puente, an economist at BBVA Chile.
“The employment figures are positive but you can also say that they will create inflationary pressure toward the end of the year,” Puente said by telephone from Santiago. “This confirms the central bank will continue its policy of quickly returning interest rates to normal.”
Policy makers at the central bank on July 15 raised the benchmark rate by half a point to 1.5 percent, saying in a statement accompanying the decision they would continue to increase lending costs this year.
Chilean unemployment normally rises at this time of year because of the seasonal effects of the southern hemisphere winter, which curtails agricultural jobs, Puente said. The agriculture and fishing industries shed about 45,000 jobs from the three months through May, the institute said. Manufacturing and construction hired 30,400 and 14,500 people, respectively. Regions hardest hit by the 8.8 magnitude earthquake showed signs of recovery in the three months through June.
Growing internal demand is contributing to the labor market’s recovery, brokerage EuroAmerica said in a July 28 note. Retail sales advanced 18 percent in June from the previous year and supermarket revenue grew 7.8 percent, showing that internal demand remains strong, Juan Pablo Castro, an economist with Banco Santander SA, said July 28.
Sales of durable consumer goods grew 31 percent in June followed by a 28 percent increase in capital goods sales, the statistics institute said in a July 28 industrial production report.
Chile’s peso rose 0.3 percent to 521.75 per U.S. dollar at 11:20 a.m. New York time from 523.55 yesterday.