Chilean jobless rate likely to have risen further in June

Chile’s jobless rate is likely to have increased again in June. According to a Societe Generale research report, the jobless rate is expected to have increased to 6.9 percent in June from May’s 6.8 percent.

This is based on Chile’s labor market’s recent trends and assuming 1.7 percent year-on-year growth in labor force and 1.2 percent growth in employment, added Societe Generale.

The Chilean economy is expanding below its lowered trend rate of less than 3 percent. Moreover, the Chilean government’s counter-cyclical fiscal spending is likely maintaining resource utilization at a higher level and any significant rebound in growth from present levels seems unlikely at the moment given the difficult external environment.

Labor market has continued to be resilient in the midst of low-growth scenario and the jobless rate continues to be low by historic standards, mainly due to larger self-employment, said Societe Generale. But the jobless rate has begun adjusting and hence is likely to have risen further.

Moreover, the number of job vacancies has dropped to half in the last two to three years. Meanwhile, in the past few months, growth of wages has also decelerated. The Chilean labor market is likely to weaken further from the present levels in the medium term, noted Societe Generale.