UPDATE 1-Chile economy still struggling as factory output disappoints
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SANTIAGO, Sept 30 (Reuters) - The nascent rebound in Chile's economy in 2015 appears to have stalled, data indicated on Wednesday, with August manufacturing and mining indices both declining below market expectations.
Manufacturing production fell 1.4 percent in August from a year earlier, data from the government's INE statistics agency showed, versus a forecast 0.6 percent rise in a Reuters poll. Compared to the prior month, output fell 2.6 percent.
Falling external demand hit production of ferro molybdenum, used to harden steel, while salmon and trout production was affected by a high base of comparison, the government said.
Chile's key mining sector also struggled, with stoppages and labor unrest driving copper production down over 8 percent compared to a year ago.
Economic growth in Chile, the world's top copper exporter, has cooled on the back of slowing demand for commodities from China.
The slowdown has spread to domestic consumption in the Andean country. Although retail sales have continued to grow, August's anemic 1.9 percent increase is a long way from the dizzy double-digit heights of 2013.
Earlier this month, the central bank downgraded its forecast for overall annual growth in 2015, estimating a figure of between 2.0 percent and 2.5 percent.
The slowdown and falling copper income has caused a headache for Chile's center-left government, which has pledged to spend on education and health reforms but is expected to deliver an austerity budget this week.
One bright spot the government can point to is unemployment, which has held steady despite the slowdown and has continually defied predictions for a rise. In the three months to August it fell slightly to 6.5 percent, data showed on Wednesday, although analysts had expected it to rise to 6.8 percent. (Reporting by Rosalba O'Brien; Editing by Chizu Nomiyama and Meredith Mazzilli)
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