Chile’s jobless rate likely to have risen further in September

Chile’s jobless rate is expected to have increased in September. The economy has been expanding below its reduced trend rate of less than 3 percent. The Chilean government’s counter-cyclical fiscal spending is possibly keeping resource utilization at a high level and any rebound in growth from current levels does not seem likely at the moment amidst the tough external environment. The labor market has stayed resilient in the midst of the low-growth environment and the jobless rate continues to historically low due to higher self-employment.

But the jobless rate has begun adjusting in 2016 and is likely to have increased by two ticks to 7.1 percent in September from August’s print of 6.9 percent, stated Societe Generale in a research note.  Moreover, the number of job vacancies has halved in the last two to three years, whereas wage growth has decelerated.

In the second quarter, nominal wages expanded 5.3 percent year-on-year on average, the lowest in 22 quarters. In the third quarter, nominal wages have risen 5.2 percent year-on-year on average in July and August. Chile’s labor market is expected to weaken further from the current levels in the medium term, added Societe Generale.