- Manufacturing fell 3% Y/y in Oct.; retail sales rose 1.7% Y/y
- Unemployment unexpectedly slid to 6.3% from 6.4% a month ago
Chilean manufacturing contracted more than expected in October, dropping at the fastest pace in five months, as Latin America’s wealthiest economy struggles to revive growth following a slump in copper prices. Unemployment unexpectedly fell.
Manufacturing shrank 3 percent from the year earlier, the National Statistics Institute said on its website Monday, compared with the median estimate of 14 analysts surveyed by Bloomberg for a drop of 1.4 percent. Industrial production slid 0.6 percent over the same period and retail sales rose 1.7 percent.
The central bank raised interest rates for the first time in four years in October as Chile’s economy resumed growth and inflation remained above the target range. Increased government spending and a tentative pick-up in consumer spending helped gross domestic product to expand 0.4 percent in the third quarter from the previous three months, when the economy had stagnated, the central bank said on Nov. 18.
“The economy is stabilizing into low growth,” said Miguel Ricaurte, chief economist for the Andean region at Banco Itau Unibanco SA in Santiago. “Our base scenario includes year-end growth of 2 percent, with the central bank hiking again in December.”
Central bank President Rodrigo Vergara has said GDP was in line with forecasts and that caution needed to prevail before jumping to "general conclusions." Overall, risks for the economy remain, especially from the slowdown in China and the beginning of monetary tightening in the U.S., he said.
Chile’s unemployment rate fell to 6.3 percent in the three months through October from 6.4 percent in the month-earlier period, the statistics institute said Monday in a separate report. The median estimate of 17 economists surveyed by Bloomberg was for the jobless rate to remain unchanged at 6.4 percent.
The strength of the labor market and increased fiscal spending has helped Chile avoid the recession that has hit Brazil, Latin America’s largest economy.
Chile economy will expand 2.1 percent this year, outperforming the 0.7 percent average for Latin America, according to economists surveyed by Bloomberg.