The Chilean economy is expanding much lower than its reduced trend rate of below 3%, as compared with 4% just a few years back. Therefore, the labor market resilience is not mirroring the state of the economy and resource utilization is possibly being kept at a high level. In the mean time, it is unlikely for growth to rebound from current levels given the tough external environment.
“We expect the unemployment rate to have risen to 6.0% in February, following the recent trends in the labour market and assuming 1.8% yoy growth in the labour force and 1.9% yoy growth in employment”, says Societe Generale.
Meanwhile, statistical discrepancies make it difficult to draw inferences from the labor market. Chile’s jobless rate has continued to be the same despite slow down of wage growth in the past few months and reduction in the number of job vacancies by half in the past two to three years. According to Societe Generale, the labor market is likely to weaken in the medium term from current levels.
