Chile's Industrial Output Declines and Jobless Rate Rises

  • The unemployment rate rose to 6.6% from 6.5% the month before
  • Manufacturing rose 0.7% Y/y vs est. 1.3%; Retail Sales Up 2.9%

Chile’s industrial production fell in July from the year earlier as mining output contracted, while the jobless rate rose, damping hopes that domestic demand would help growth accelerate later this year.

Industrial production slid 1.7 percent, led lower by a 4.4 percent drop in mining, the National Statistics Institute said on its website Monday. Unemployment climbed to 6.6 percent in the three months through July from 6.5 percent the year before, the agency said in a separate report, in line with the median estimate of 19 economists surveyed by Bloomberg.

A year after the government said economic growth had turned a corner and was beginning to pick up, most indicators still point to weak growth as a slump in copper prices undermines investment. While various policy makers highlighted “progress” in recent economic statistics in the minutes of the Aug. 13 rate-setting meeting released on Friday, they also said there was no indication of a “significant” rebound in the economy.

“The recovery doesn’t exist,” said Antonio Moncado, an economist at Banco de Credito e Inversiones in Santiago. “We have to get used to low growth in industry and retail sales.”

Manufacturing gained 0.7 percent in July from the year earlier, the statistics agency said, less than the 1.3 percent forecast by analysts. Retail sales climbed 2.9 percent over the same period.

Chile Retail Sales Growth
Chile Retail Sales Growth

The increase in unemployment, which had undershot analyst estimates in four of the previous five months, rose for the third time this year, further undermining the outlook for domestic demand.

The Chilean economy expanded 1.9 percent in the second quarter, more than analyst forecast, fueled by a tentative pick-up in consumer demand. Latin America´s wealthiest nation will expand 2.4 percent this year, while the region will contract 0.1 percent, according to economists surveyed by Bloomberg.

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