UPDATE 1-Chile recovery wobbles as factory output dives, jobless up
(Adds data, background, unemployment, retail sales)
SANTIAGO, June 30 (Reuters) - An incipient economic recovery in Chile looked shaky on Tuesday after government data showed factory output fell more steeply than forecast and unemployment rose in May.
Chilean manufacturing production fell 3.3 percent in May from a year earlier compared with a 0.8 rise in April, data from the government's statistics institute INE showed on Tuesday.
That compared to a Reuters poll forecast for a 1 percent fall in Chile, the world's top copper producer. Hurt in part by calendar effects, most industries recorded a decline, with production of ferro molybdenum, salmon and cellulose particularly impacted, INE said.
On a month-to-month basis manufacturing fell 5.2 percent in May versus April after sliding 4.0 percent in April versus March.
The year-on-year reading was the lowest since August 2014, raising questions as to the pace of recovery.
Chile's economy grew 1.9 percent in 2014, marking the weakest expansion in five years.
The central bank has said it expects growth to recover to between 2.25 and 3.25 percent this year, although it has downgraded it from former rosier estimates as mixed data has shown that the economy is still stuttering.
Adding to Chile's woes, unemployment rose to 6.6 percent, the highest level since September last year, according to INE data - well above forecasts of 6.3 percent and the 6.1 percent rate posted for April.
On the plus side, new projects boosted copper output, while retail sales extended last month's run to grow 3.1 percent versus a year earlier.
(Reporting by Rosalba O'Brien; Editing by Chizu Nomiyama and W Simon)
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