* July manufacturing production up 4.7 pct y-o-y vs 1.7 pct
* Figure boosted by wine & paper production and low
* Minutes show bank considered rate cut in August
* Positive data reduces likelihood of September cut
SANTIAGO, Aug 29 Chile's manufacturing
production beat forecasts in July, boosted by a strong rise in
wine output, with bubbly domestic spending also lending
resilience to the South American economy.
The upbeat reading comes after Chile's central bank
considered a cut in interest rates this month to counter an
uncertain economic outlook on signs of a slowdown in China and
withdrawal of monetary stimulus in the United States.
Manufacturing production rose 4.7 percent
year-on-year, according to economic figures released Thursday by
the National Statistics Institute. That significantly outpaced
an expected rise of 1.7 percent forecast in a Reuters poll of
The strong July numbers followed a surprisingly weak 2.7
percent drop in June's manufacturing output compared with a year
Economists expected some bounce back in July due to
statistical quirks - the base of comparison was low for July
2012, which had two fewer working days than July this year.
An 8.6 percent increase in food and drink production helped
lead the overall figure much higher. This was principally due to
growth in wine output, the statistics agency said.
Known for its Carmenere grape variety, as well as Cabernet
Sauvignon and Merlot, Chile is the world's No.7 wine producer.
It saw an 85 percent jump in export volumes in 2012 compared
with 2011 as Chilean wine began to take off in emerging markets
such as Asia.
Although over half of Chile's exports are in copper, it also
exports fruit, wine, wood and paper.
Crucial copper production rose 16 percent compared to a year
ago, with ore grades improving and higher output from new mines.
Surging demand from Asia has also been key for forestry,
wood pulp and paper products which make up Chile's no.2 export
sector. Growth in that sector boosted July's manufacturing
figures as eucalyptus cellulose production rose.
HOW LONG CAN THEY HOLD IT?
Although showing signs of slowing, domestic consumption - a
driver of the economy alongside mining - has remained buoyant,
raising chances of an interest rate cut this year.
The central bank considered a rate cut at its Aug. 13
meeting, minutes released earlier on Thursday showed. As with
other emerging economies, Chile's outlook has become gloomier on
signs of a slowdown in China and expectations of a withdrawal of
monetary stimulus by the U.S. federal bank.
Economic growth was 4.1 percent in the second quarter,
Chile's slowest annual rate of expansion in nearly two years.
A central bank poll on Wednesday showed traders thought the
bank would hold its rate steady in September, and go through
with a 25 basis point cut within three months.
However, Thursday's data will likely lead to a more dovish
stance in the market. Adding further weight, a Reuters poll
published Thursday showed economic activity probably expanded at
6.1 percent year-on-year in July, the strongest pace since
Retail sales grew 10.3 percent in July versus a year ago,
after growing 7.7 percent the prior month.
"Although it is unreasonable to assume that this (dynamic)
tendency will be maintained over the next few months, the
deceleration signals seem to be losing force compared to the
recent economic activity indicators," said economists at
For a link to the Thursday's National Statistics Institute
report on the manufacturing and retail sectors, please see: