UPDATE 2-Chile jobless rate ticks up to 6.6 pct in Aug-Oct period

Fri Nov 30, 2012 10:27am EST

Related Topics

* Jobless rate above market forecast of 6.4 pct
    * Work force grew faster than employment
    * Jobless rate was 6.5 percent in July to September
    * Jobless rate shrank vs 7.2 pct in year-earlier period


    SANTIAGO, Nov 30 (Reuters) - Chile's jobless rate for the
August to October period rose slightly as the work force grew
faster than the increase in employment, the National Statistics
Institute (INE) said on Friday. 
    The unemployment rate increased to 6.6 percent,
following a July to September jobless rate of 6.5 percent.
    It was forecast to have dropped to 6.4 percent for three
month period ending in October, according to the median response
of 10 analysts and economists polled by Reuters. 
    "The retail sector and a seasonal effect in agriculture
pushed up employment, though this was pared back by decreases in
hotels and restaurants, transport, storage and communications,"
the INE said.
    However, some analysts noted that Chile remains close to
boasting full employment and that the jobless rate has
significantly eased from the 7.2 percent level it clocked in the
August to October period of 2011. 
    "We think the dynamism of the labor market continues to pose
an upward risk on inflation in the medium term," BICE
Inversiones said in a note to clients. "If this behavior
persists, we think it could lead the central bank to harden its
monetary policy message in the next months." 
    The central bank's benchmark interest rate has
stayed on hold at 5 percent since a cut in January largely
because the Andean nation has shown better-than-expected
resilience to slowing demand from top trade partner China and
fallout from the euro zone's crisis.
    The bank is seen holding its key rate again at its monetary
policy meeting on Dec. 13, and it is seen at that level in three
and six months, the bank's fortnightly poll of traders showed on
Wednesday. But traders now see the rate inching up to 5.25
percent in 24 months time. 
           
 
    A tight labor market, robust domestic demand and firm
economic growth have helped small, export-dependent Chile defy
expectations for a shaper slowdown despite the euro zone's debt
crisis and moderating demand from top trade partner China.
    "In Chile, there are medium-term inflationary risks, due to
exhaustion of output gaps and a persistently dynamic domestic
demand," central bank board member Joaquin Vial said in prepared
remarks on Friday.    
    "Chilean activity has outperformed that of other countries,
particularly developed economies. But, given existing financial
and commercial links, it is unreasonable to think that our
country will be spared the effects of events abroad," Vial
added.
    On Friday, both Brazil and India announced disappointing
quarterly economic growth rates, raising new fears that big
emerging markets are getting dragged into the stagnant morass of
the global economy.  
    Export-dependent Chile has so far fared better than expected
amid fears of a slowdown, with the economy expanding 5.7 percent
in the third quarter from a year earlier.
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