UPDATE 1-Chile Sept retail sales point to consumer recovery

(Adds finance minister comments)

SANTIAGO, Oct 27 (Reuters) - Retail sales in the Chilean capital Santiago jumped 7.5 percent in September from a year earlier, a sign consumer confidence is returning as the economy pulls out of its first recession in a decade.

Finance Minister Andres Velasco said the data, released on Tuesday by the National Chamber of Commerce, was proof Chile is "coming out of the crisis" but warned employment was lagging.

"We see a significant upturn in sales. That's good for families and shows they have confidence in their income. Of course it's also good for companies which are going to sell more and therefore employ more people and that is the challenge to come," Velasco said after speaking at a seminar.

Chile, the world's top copper producer, has started to recover thanks in part to rising copper prices. Economists are watching for signs consumer demand is also getting stronger.

Retail sales in the Santiago metropolitan area, which represents almost a third of the country's population, expanded 8.4 percent in the third quarter year-on-year and 2.3 percent in the first nine months of the year.

The chamber estimates sales in the capital will grow about 3 percent this year from 2008. (Reporting by Rodrigo Martinez; Writing by Louise Egan; Editing by James Dalgleish)