SANTIAGO, Nov 28 (Reuters) - Chile’s economic recovery has yet to really gain traction, data for October showed on Friday, although an unexpected fall in jobless numbers could herald a boon to flagging consumption ahead of the holiday season.
Economic growth in the top copper producer has stalled in 2014, hit by cooling investment in the key mining sector and dwindling consumption.
But the labor market has remained in better shape than many feared. The jobless rate for the August to October period fell to 6.4 percent from 6.6 percent in September to July, the government said on Friday, beating market expectations.
That likely bodes well for consumption, after retail sales decreased 0.2 percent in October from a year earlier. Sales have grown strongly in recent years in Chile, one of Latin America’s most developed economies, but fell last month for the first time since the 2009 recession.
“The better than expected jobs report is reassuring. With a significant rebound in investment spending out of sight, the burden of the economic recovery will likely fall on the shoulders of private consumption, which is directly influenced by labor market conditions,” said Tiago Severo, economist at Goldman Sachs.
Some analysts took the jobs data with a grain of salt though, pointing out that a sharp rise in self-employment was a key contributor in bringing the jobless rate down.
“The increased importance of self-employment reflects the reduced dynamism of the labor market, considering the low stability these types of jobs usually exhibit,” said Banchile Inversiones in a note to clients.
Data from the government’s INE statistics agency also showed on Friday that manufacturing output rose 1.0 percent in October from a year earlier, in line with a Reuters poll forecast, due largely to a jump in the production of paper products and wood pulp.
It was the first time since early 2013 that manufacturing production strung together two consecutive months of positive growth, though it paled in comparison to the 5.4 percent expansion posted in September.
Chile is the world’s top copper producer, accounting for around one-third of global supply, and also a leading exporter of wood pulp, wine and salmon.
Copper production fell year-on-year in October, the statistics agency said. (Editing by Rosalba O‘Brien and Chris Reese)