Chile’s jobless rate likely to have increased in May

The Chilean economy is expanding below its reduced trend rate of lower than three percent from more than four percent a few years ago. Jobless rate in the country is likely to have increased slightly in May.

The labor market in Chile has continued to be resilient in the midst of low-growth environment, while the jobless rate remains low due to increases in self-employment. But it has begun adjusting slowly. It is expected to have increased to 6.6 percent in May from April’s 6.4 percent, based on labor market’s recent trends, said Societe Generale in a research report.

Chile labor force is expected to have grown 1.1 percent year-on-year, whereas employment is likely to have increased 1 percent year-on-year. Furthermore, the number of job vacancies has dropped to half in the last two to three years, while growth in wage has decelerated in the last few months.

Meanwhile, the statistical discrepancies make inferences from the labor market difficult, given the limited data available in the present survey. Chile’s labor market is expected to further weaken in the medium term, according to Societe Generale.

The Chilean economy is growing below its trend rate, while resource utilization is likely being sustained at a higher level by the Chilean government’s counter-cyclical fiscal spending. Moreover, any significant rebound from the present growth levels seems quite unlikely due to the difficult external environment.