WRAPUP 3-Chile economy slows slightly, but consumption, jobs firm

Mon Dec 30, 2013 11:16am EST

* Manufacturing output slips again
    * Retail sales healthy, jobless rate inches down
    * Central bank's Dec decision to hold rates was unanimous


    By Antonio De la Jara and Anthony Esposito
    SANTIAGO, Dec 30 (Reuters) - Chile's economy showed signs it
was continuing to slow slightly in November, with manufacturing
output slipping for a fourth straight month, even as consumption
and the labor market remained firm.
    Manufacturing production fell 1.1 percent in
November from a year earlier, due in part to lower production of
some steel and iron products, government data showed on Monday.
    Economists polled by Reuters had expected a drop of 1.3
percent. 
    Retail sales grew a healthy 9.2 percent from a year earlier,
government data also showed on Monday. That was slower than a
13.4 percent increase in October and 10.7 percent in November
2012.
    Mining powerhouse Chile is heavily dependent on exports and
domestic consumption, so manufacturing and retail sales data are
closely monitored for a pulse of the economy's health. 
    The jobless rate for September to November
inched down to 5.7 percent, as employment in agriculture,
livestock, forestry, construction and real estate picked up, the
government's INE statistics agency reported separately.
    "The 5.7 percent unemployment rate is the lowest in nearly
three decades for the September to November period," Finance
Minister Felipe Larrain said on Twitter.
    Analysts surveyed had expected the jobless rate to remain
steady at 5.8 percent.Monday's slew of economic data follows the central bank's
decision to take a breather and hold steady the key interest
rate in December, after cutting it by 25 basis points in both
October and November. 
    "The decision to pause the cycle in December corroborates
our view that (the bank's) directors would likely want to buy
some time to better assess the growth-inflation outlook before
delivering additional monetary accommodation," Goldman Sachs
said in a note to clients.
    The bank's five-person governing board was unanimous in its
decision to hold the rate at 4.50 percent on Dec.
12, though they also weighed cutting the rate, minutes of that
meeting showed on Monday. 
    The decision to hold rates "was justified in that the
slowdown of the economy had been mild and it was expected to
grow steadily in the coming quarters," the minutes said.
    "Plus two cuts had been made to the policy rate, which were
working and would continue to gradually affect the components of
demand that were the most sensitive to credit costs," the bank
added.
    The market largely expects the bank to stick to a
wait-and-see stance in the short-term to get a stronger sense of
where Chile's two-track economy is heading. 
    "The scenario of slowing domestic demand coupled with good
growth in the natural resources sector is unchanged," said
Matias Madrid, chief economist at Banco Penta. "This will likely
lead the central bank to hold the rate again in January."  
    Meanwhile, data on Monday showed that world No. 1 copper
producer Chile produced 514,889 tonnes of copper in November
, a 7.6 percent increase from the year before, due
to a recovery in a major deposit that had a troubled 2012.
 
    Chile, which produces a third of the world's copper, is
struggling with dwindling ore grades in many of its aging
deposits, although new mines have helped increase output in
2013.
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