* Strong domestic and external demand boost indicator
* But manufacturing contracts in February vs January
* Copper output rises on grades, smoother operations
By Antonio De la Jara
SANTIAGO, March 28 Chilean manufacturing
production grew 0.9 percent in February from a year ago mainly
due to strong domestic and external demand, broadly in line with
a Reuters forecast for a 0.8 percent increase, government data
showed on Thursday.
But the indicator slowed sharply compared with the 4.8
percent growth clocked in February 2012.
"As with previous months, the food industry led growth, as
did, to a lesser extent, production of metals," the INE
statistics agency said.
Manufacturing also clocked a 4.3 percent contraction
compared with January, in seasonally- adjusted terms.
One fewer working day in February, compared with the same
month a year ago, weighed on the index.
In January, manufacturing output grew a
larger-than-expected 4.3 percent from a year earlier, also
boosted by the food industry.
Thriving domestic demand, strong investments and a low
jobless rate have buttressed Chile's economy and helped prompt
the central bank to keep its key lending rate
steady at 5.0 percent since a surprise cut in January 2012.
Robust local demand could prove to be too much of a good
Central bank board member Enrique Marshall warned last Friday
the main local risk to Chile's economy is that growth in
domestic demand outpace the expansion of gross domestic product,
which could lead to a widening of the current account deficit.
While buoyant growth and low inflation at home versus
persistent economic threats from abroad have kept the central
bank's hands tied on monetary policy, traders polled by the bank
see the rate creeping up to 5.25 percent in 12 months and
analysts polled by the bank see it at that level within 11
SMOOTHER COPPER OPERATIONS
Chile produced 420,207 tonnes of copper in February, a 2.8
percent expansion from a year earlier, on improved ore grades
and higher output at some deposits that operated irregularly in
2012, the government also said on Thursday.
But production slid 11.2 percent in February compared with
January, the INE agency added, without including an explanation.
Chile's output of the red metal jumped by 3
percent to 5.455 million tonnes during all of 2012, boosted by
better grades, new mines and a low base of comparison.
Molybdenum output rose 23 percent to 2,959 tonnes in