Chile Economic Activity Rebounded in Sept. on Manufacturing

  • Imacec index rose 1.1% in Sept. from month before; est. 0.6%
  • South America's wealthiest nation reeling from commodity slump

Chile’s economic activity rose in September at the fastest pace in two years after tumbling the month before.

The Imacec index, a proxy for gross domestic product, rose 1.1 percent from the prior month, when it contracted 1 percent, the central bank said on its website Thursday. Compared with the year earlier, the economy expanded 2.6 percent, above the 2.2 percent median estimate of 21 economists surveyed by Bloomberg.

Growth was fueled in September by an unexpected rise in manufacturing that helped lift industrial production for only the third time this year, according to figures released last week. It is too soon to say if the pick-up represents a long-term rebound in growth, analysts said. Finance Minister Rodrigo Valdes cut the growth forecast for this year on Oct. 5 to 2.25 percent from the 2.5 percent estimated in July and 3.6 percent predicted in the 2015 budget.

“It is a positive number, but there is no trend yet,” said Andres Osorio, an economist at IM Trust Credicorp Capital in Santiago. “We need to wait a few more months to speak of a trend and start celebrating.”

The month-on-month increase in the Imacec was the biggest since June 2013, while the annual gain compared with 1.1 percent the month before and 2.5 percent in July. Economic growth slowed to 1.9 percent in the second quarter from 2.5 percent in the first three months of the year.

A rebound in growth requires a pick-up in business and consumer confidence, central bank President Rodrigo Vergara said on Nov. 3. That was the same day that a survey by the Chilean Institute for Quality Business Management showed a drop in business confidence in October. The index slid to 42.99 from 45.28 in September.

Nominal wages rose 5.9 percent in September from the year earlier, the national statistics agency said in a separate report Thursday, compared with the 5.8 percent median forecast of five analysts surveyed by Bloomberg.

Chile raised interest rates on Oct. 15 as a slump in the peso pushed up consumer prices, leaving annual inflation above 2 percent to 4 percent target range for 18th straight month. Policy makers lifted the key rate by a quarter-point to 3.25 percent, with Vergara reiterating the outlook for one or two rate increases in the next 10 months this week.

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