(Updates with economist’s comments in third paragraph.)
Sept. 29 (Bloomberg) -- Chile’s industrial production beat analyst estimates and rose 1.7 percent in August from the year before, indicating economic growth in the world’s leading copper producer may not be slowing as quickly as forecast.
Industrial output growth accelerated from 0.7 percent in July, compared with 4 percent in June and 9.7 percent in May, the National Statistics Institute said in a report today. The median estimate of 13 economists surveyed by Bloomberg was for production to remain unchanged. Industrial sales rose 2.9 percent in August, the institute said.
“This makes the possibility of an interest rate cut a bit more remote,” Banco Falabella economist Flavio Magnasco said by phone from Santiago. “The economy is more dynamic.”
Interest rates are at a “normal” range and are coherent with keeping inflation anchored around the central bank’s 3 percent target, bank President Jose De Gregorio said in Santiago today. The bank, which has kept key rates unchanged for the past three months, is monitoring financial markets daily and is prepared to respond if the economy deteriorates, he said.
The peso strengthened to 514 to the dollar at 10:23 a.m. New York time from 518.98 before the industrial data was published. The peso will trade at 500 per dollar in three months, according to the median estimate of 52 investors and traders in a central bank survey published yesterday.
Production of rubber and plastic grew 18 percent in August, followed by a 4.3 percent gain in food and beverage output and a 1.7 percent increase in machinery manufacturing, the institute said. Paper production fell 2.9 percent and copper output dropped 8.7 percent to 427,420 metric tons on lower mineral grades and strikes.
Copper output will decline in 2011 after snowstorms and strikes hit mines owned by BHP Billiton Ltd. and state-owned Codelco, Mining Minister Hernan de Solminihac said in a Sept. 5 interview in Sydney. The metal accounts for more than half of Chile’s exports and about one-third of fiscal revenue.
Retail sales rose 9.1 percent from last year, down from a 9.6 percent increase in July, the institute said today. Supermarket sales growth slowed to 5.6 percent in August from 8.3 percent in July, it said.
Chile’s economic growth is showing signs of slowing after gains in the Imacec index, the central bank’s proxy for gross domestic product, decelerated to 4 percent in July from 6.2 percent in June and 7.5 percent in May, De Gregorio said in a presentation posted on the bank website.
“Activity and demand data show moderation in the pace of expansion,” the central bank President said. “However, the labor market remains tight and credit continues to grow.”
Salaries grew 5.9 percent in July from last year and the unemployment rate in the three months through July increased to 7.5 percent from 7.2 percent in the month earlier period, the institute said on Aug. 31.
Gross domestic product will grow 6.5 percent this year and 4.7 percent in 2012, according to the median estimate of 65 economists surveyed Sept. 9 by the central bank.
The economists forecast policy makers will keep their key interest rate unchanged at 5.25 percent through the end of this year before reducing borrowing costs to 5 percent by February.
--Editors: Philip Sanders, Harry Maurer
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