chile nov copper output down 6.4 percent yoy

Chile Nov copper output down 6,4% y-on-y
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By: Reuters
Published on 30th December 2008
SANTIAGO - Chilean industrial production sank a bigger-than-expected 5.7 percent in November from a year earlier to its lowest level in nearly a decade, data showed on Tuesday, with economists betting on an interest rate cut next month.

The National Statistics Institute's (INE) industrial output figure was well below the median forecast of seven economists and analysts polled by Reuters, who expected a fall of 1.0 percent. It was the weakest reading since June 1999, an INE official said.

"The figures are weak, for both industrial production and sales," said Tomas Flores, an economist with the Instituto Libertad y Desarrollo think tank. "The figures are consistent with lower consumer and investment spending."

Chile's peso briefly weakened after the worse-than-expected data, before pulling back slightly on profit-taking.

The INE said that even Chile's resilient food and beverage industry was beginning to show the effects of slowing demand.

"This result was due mainly to less activity in the food and beverage sector, in base metal fabrication and in non-metalic mineral output," INE said, also citing one less working day in the month compared with a year ago.

The data showed that Chile's resilient spending is beginning to slacken amid the global slowdown, which may mean earlier and more agressive central bank rate cuts than previously expected.

"Given this scenario, with a drop in spending on top of expectations for negative December inflation, a rate cut as strong as 50 basis points in January is more likely," said Juan Pablo Castro, an economist with Santander Investment.

Central Bank President Jose De Gregorio this month hinted that the bank would cut rates in coming months, saying he expected sharp reductions in inflation, which is running near 14-year highs.

The bank's board weighed a 25 basis point rate cut this month, but voted in the end to hold rates at 8.25 percent, their highest level in a decade.

The INE also reported that Chile's copper output tumbled for a third month running, falling 6.4 percent in November as the world's biggest copper producer churned out 442,872 tonnes of the red metal.

Output from January through November this year fell 3.7 percent compared to the same period last year to 4,879,828 tonnes. Chile is the world's No.1 copper producer.

Production of molybdenum, a metal that occurs in conjunction with copper, also fell hard in the month, down 24.1 percent in November to 2,534 tonnes. For the year-to-date, molybdenum production was down 26 percent versus the same 11-month period last year, at 29,875 tonnes.

Chile's jobless rate for the September-to-November period of 7.5 percent, however, was unchanged from the August-to-October rate reported last month.

The jobless result was slightly above the 7.3 percent median forecast of seven economists polled by Reuters.