Reuters: US Dollar Report: WRAPUP 2-Chile manufacturing, copper output leaps, jobless falls

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WRAPUP 2-Chile manufacturing, copper output leaps, jobless falls Sep 28th 2012, 16:06 Fri Sep 28, 2012 12:06pm EDT * Manufacturing in August soars 6.8 percent vs July * June to August jobless rate eases to 6.4 percent * Copper output in August jumps 11.7 percent vs July * World No.1 copper producer performing better-than-expected * Chile peso one of world's strongest performers vs dollar By Antonio De la Jara and Moises Avila SANTIAGO, Sept 28 (Reuters) - Chile's manufacturing and copper output soared in August from July and the country's jobless rate sank to its lowest in six months, buoyed by domestic consumption and increased import demand, primarily from Brazil and the United States, the government said on Friday. Chile's stronger-than-expected economic performance has helped drive its peso currency up more than 9.5 percent against the U.S. dollar this year. Together with the Hungarian forint, it ranks as the strongest performer against the dollar among the 152 currencies tracked by Reuters. Early Friday, after the release of the surprisingly strong production data, the central bank warned it was not ruling out intervening in the foreign exchange market, which it did last year, to stem the peso's rise. Following the remarks, the peso retreated against the dollar, and was trading about 0.6 percent lower on the day at about 474 to the dollar. Manufacturing output increased a seasonally adjusted 6.8 percent in August from July and rose a larger-than-forecast 3.6 percent from a year earlier on improved domestic and external demand conditions, according to the National Statistics Institute (INE) report on Friday. Chile's jobless rate for the June to August period fell to 6.4 percent on jobs in public administration and defense, teaching and mining, easing from May to July's 6.5 percent level to its lowest since December to February's 6.4 percent rate. "We think the data released today shows favorable growth in local activity and doesn't display evident signs of contagion on the back of international problems," BICE Inversiones said in a note to clients. Copper is the backbone of the Chilean economy, making it highly export-dependent. But so far it has resisted the fallout of euro zone debt woes and slowing demand from China, its leading copper customer, better than previously forecast. INE cited improved conditions for "external demand are explained by the exports of products like salmon and trout, mainly to Brazil and the United States." Domestic demand was boosted by the use of metal-based products, such as railings and fences, in real estate projects, it added. A low unemployment rate, brisk domestic demand and strong economic activity, weighed against a threatening global backdrop, are seen pressuring the bank to keep its key interest rate at 5.0 percent in the near future, and not reduce it to stimulate economic growth, as has been the case recently in Latin American peers Colombia and Brazil. The central bank is seen holding the rate at 5.0 percent again at its monetary policy meeting on Oct.18, and it is also seen at that level in three and six months, the bank's fortnightly poll of traders showed on Wednesday. A Reuters poll had seen manufacturing output growth at 1.0 percent in August from a year ago on waning external demand and a strong domestic currency exporters say dull their competitive edge globally. The unemployment rate was forecast to have remained unchanged at 6.5 percent, according to the median response of 10 analysts and economists polled by Reuters. COPPER OUTPUT JUMPS Chile lynchpin copper output jumped in August, both compared with the same month of last year and with July 2012. Chile produced 462,643 tonnes of copper in August , jumping 7.8 percent from the same month a year earlier due to a low base of comparison and a higher current productive capacity, the government also said on Friday. Copper output in August of last year was hit by the tail-end of a massive strike at world no.1 copper deposit Escondida, majority owned by BHP Billiton. Production of the metal rose 11.7 percent in August 2012 from a month earlier, boosted by higher rates of mineral-processing and better ore grades, the INE added. Red metal production reached 414,339 tonnes in July, a 9.8 percent jump from the same month a year earlier, also due to a low base of comparison and higher productive capacity, the government said last month. But copper output sank 8.5 percent in July compared with June on the maintenance of conveyer belts and grinding equipment. Chile, which produces around a third of the world's copper, is struggling to boost its key copper production despite stubbornly dwindling ore grades in old mines, labor action, energy woes and operational troubles. The Andean country produced 3.52 million tonnes of copper in the January to August period, a 4.0 percent increase from the same period of 2011. Chile is seen mining 5.404 million tonnes this year, significantly down from a previous projection of 5.7 million tonnes. But analysts and industry players are increasingly questioning whether Chile will be able to meet its ambitious mining production and investment aims. "Considering that no new operations are due to start before year-end, maintaining August's rhythm would mean an annual output of 5.34 million tonnes (+1.5 percent year-on-year), which is difficult if one takes into account Collahuasi's problems and generalized decreases in ore grades," said Pedro Fuenzalida, a senior analyst with LarrainVial in Santiago. Collahuasi, the world's No. 3 copper mine, expects its red metal output to improve in the second half of the year versus the first six months, but its full-year output will likely still be below last year's, as lower ore grades and accidents hit operations. Link this Share this Digg this Email Reprints

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