Chile’s jobless rate likely to have increased in April; but labor market to weaken in medium term

The Chilean economy is expanded lower than the reduced trend rate of below 3%, as compared with over 4% a few years back. In this regard, the labor market’s resilience does not show the state of the economy. Resource utilization is possibly being maintained at a high level by counter-cycling fiscal spending of the government. Meanwhile, any significant rebound in growth from present levels seems unlikely at present due to the challenging external environment.

“We expect the unemployment rate to have increased to 6.5% in April from 6.3% in March, based on recent trends in the labour market and assuming 1.6% yoy growth in the labour force and 1.3% yoy growth in employment”, said Societe Generale in a research report.

However, the Chilean labor market is likely to weaken from the current levels in the medium term, added Societe Generale.