Bloomberg News

Chile’s August Unemployment Rate Beat Estimates at 7.4%

September 30, 2011

(Updates with details of report starting in second paragraph.)

Sept. 30 (Bloomberg) -- Chile’s unemployment rate fell to a lower-than-forecast 7.4 percent in the three months through August, the National Statistics Institute said in a report today.

The median estimate of 13 economists surveyed by Bloomberg was for unemployment to increase to 7.6 percent through August from 7.5 percent through July. The jobless rate was 8.3 percent in the three months through August last year.

Chile’s “quite tight” labor market and growing internal demand pose a risk to inflation, central bank board member Rodrigo Vergara said in a Sept. 28 interview. Still, the European debt crisis and its potential impact on the global economy may pose a bigger threat to Chile, he said.

“The external risk has grown and I would say internal risk has declined, at least in relative terms,” Vergara said from his office in Santiago. “Internal risk is there, but in current circumstances, given problems in the world economy, it’s relatively minor compared to external risks.”

Twelve-month breakeven inflation, which reflects traders’ views of average price increases and is derived from the gap between nominal and inflation-linked yields, fell 5 basis points, or 0.05 percentage point, to 2.54 percent at 8:39 a.m. New York time.

Inflation quickened to 3.2 percent in August from 2.9 percent in July, the institute said in a Sept. 8 report. Policy makers target 3 percent inflation, plus or minus 1 percentage point over a 24-month horizon.

Internal demand will grow 9.1 percent this year and 4.5 percent in 2012, the central bank said in its monetary policy report, published this month. Gross domestic product will expand 6.25 percent to 6.75 percent this year and 4.25 percent to 5.25 percent in 2012 as world growth slows to 3.9 percent this year from an estimated 5 percent in 2010, the bank said.

--Editors: Philip Sanders, Bill Faries

To contact the reporter on this story: Randall Woods in Santiago at rwoods13@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.


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