Employment And Industrial Production Both Down
Employment and industrial production both fell in June while Santiago housing sales rose, according to ecnomic data released this week. Despite some glimmers of hope, Chile’s economy, the figures indicate, continues to suffer the effects of the global financial crisis.
Chile’s National Statistics Institute (INE) reported Thursday that unemployment rose to 10.7 percent for the April-June period, the sixth consecutive three-month-period rise. The figure marks an increase of 0.5 percent over March-May figures and a 2.4 percent rise compared to the April-June 2008.
“The unemployment rate was in line with expectations for this winter period,” said the INE report. “Negative seasonality usually increases at this time of the year, independent of the economic cycle.”
The Society for Industrial Development (SOFOFA) also published data showing that industrial production in Chile fell by 14.2 percent in June compared to the same period in 2008. The fall represents the ninth consecutive monthly decrease in production, but is less severe than May’s slide. Analysts suspect the numbers could be a sign that Chile’s economy gradually beginning to recover.
The 14.2 percent decrease in industrial production has been largely attributed to a 32.1 percent fall in salmon production as a result of the ISA virus, which has killed off a large proportion of Chile’s valuable salmon stocks (ST, July 15). ISA, short for Infectious Salmon Anemia, was first detected in Chilean waters two years ago. The yet-to-be-contained outbreak has forced the closure of numerous salmon farms and some processing plants. Companies, as a result, have laid off as many as 15,000 workers.
Production of goods for construction also fell 19.2 percent in June, representing a decrease of 0.2 percent on May’s figures, but still the lowest fall since February 2008, SOFOFA reported. The group projects an overall fall of 8 percent in industrial production for the whole of 2009.
Copper production is down as well – by 2.6 percent so far this year, according to the INE. Even slight variations in copper production can cause major ripples in Chile’s economy. Chile is the world’s largest copper producer. The metal, furthermore, accounts for around half of all the country’s export earnings.
Many economists, nevertheless, say an end to the prolonged downturn may be nigh. One positive indicator that the Chilean economy may be getting back in its feet is a recent upsurge in Santiago home and apartment sales.
According to the Chilean Chamber of Construction (CCHC), sales of new residences in the capital rose 11 percent in the second quarter compared to the same three-month period last year. In total, 6,908 new homes and flats were sold, a 13 percent increase over the first quarter, the CCHC reported.
The bulk of those purchases (4,868) were apartments, sales of which rose 21.6 percent compared to the second quarter in 2008. Purchases of new homes actually fell slightly during the April-June period, from 2,222 in 2008 to 2,040 this year.
The Chamber’s president, Lorenzo Constans, thinks government housing subsidies, low interest rates and improved consumer confidence have all helped spur the turnaround. The slide, he told the daily La Tercera, has bottomed out, “although we’re still moving horizontally and we can’t go forward all that quickly.”
New construction, however, is way down as property owners are more interested at this point in unloading stock leftover from the pre-crisis building boom than risking new ventures. In June, construction began on just 467 new units, some 80 percent less than the 2,332 units for which building began the same month last year.