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WRAPUP 2-Chile factory data weak, unemployment near three-year low
December 28, 2012 / 3:50 PM / 5 years ago

WRAPUP 2-Chile factory data weak, unemployment near three-year low

* Manufacturing output data trails market expectations

* Jobless rate dips to 6.2 percent

* November’s copper output picks up on better ore grades

By Antonio De la Jara and Moises Avila

SANTIAGO, Dec 28 (Reuters) - Chilean manufacturing output grew a weaker-than-expected 0.8 percent in November from a year earlier, dampened by sluggish external demand and fewer working days, the state statistics agency said on Friday.

Despite the disappointing factory data, unemployment fell to a near three-year low and economic analysts said rates would likely stay on hold in the coming months as robust domestic demand buoys the economy and helps offset weak global demand.

The relatively new manufacturing index, broadly comparable to the prior industrial output index, fell a seasonally adjusted 3.5 percent in November from October, after surging the previous month on the back of extra working days.

Analysts and economists in a Reuters poll forecast manufacturing production growth of 2.6 percent year on year.

The index surged 9.1 percent in October from a year earlier, the biggest annual gain in 2012, and jumped a seasonally adjusted 19.7 percent in October from September.

Chile’s small, export-dependent economy has generally fared better than expected despite slowing demand from top trade partner China and fallout from the euro zone crisis.

Factory output, food and wood paper production remained buoyant in November, helping offset external weaknesses.

A tight labor market, along with solid internal demand and strong economic growth have prompted Chile’s central bank to keep its key interest rate on hold at 5.0 percent since January.

Most economists expect the rate to stay on hold for the meantime.

“The domestic economy keeps increasing at robust rates ... and we believe the central bank should not change the monetary policy stance for the foreseeable future,” Barclays analyst Bruno Rovai said in a briefing about Friday’s data.

“We do not foresee inflationary pressures emerging from the ongoing tightness of the labor market, as core inflation continues to be very contained,” he added.

The South American country’s jobless rate for the September-November period fell to 6.2 percent due to robust economic growth, strong domestic demand and an expansion of seasonal farm jobs, the government said.

The jobless rate has been calculated using a new methodology since early 2010. Using the prior system, the September-to-November unemployment rate is the lowest in six years.

Agricultural jobs traditionally increase in the southern hemisphere’s spring and summer months.

The unemployment rate was expected to remain steady at 6.6 percent, according to the median forecast of nine analysts and economists polled by Reuters.

Chile’s jobless rate for the September-to-November period last year was 7.1 percent.

Copper production in the world’s top producer of the red metal rose 2.6 percent in November, year on year, to 478,545 tonnes of copper.

The improved output was due to better mineral ore grades at some mines and a production ramp-up at mines that started operations last year, the INE statistics agency reported.

Copper production expanded 3.7 percent to 4.94 million tonnes between January and November, compared with the year-earlier period. Compared with October, output grew 0.5 percent.

Chile is struggling with dwindling ore grades in many of its aging deposits, although new mines have helped increase output this year.

A recovery in the world No. 1 copper mine, Escondida, majority owned by BHP Billiton Ltd , as well as higher output from Anglo American Plc’s disputed Los Bronces mine are boosting Chile’s production.

Output of molybdenum, a metal used to harden steel, rose 3.6 percent to 2,790 tonnes in November, the INE said. January-to-November production of molybdenum dropped 14.7 percent versus the same period a year ago to 28,571 tonnes.

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