Chile's unemployment rate likely to rise further in August

With Chile's labour force having posted its sharpest rise in eight months, the unemployment rate rose from 6.5% to 6.6%, though Chile's employment growth in July was the sharpest in fifteen months.

"A more average pace of labour force and employment growth in August will likely raise the unemployment rate two ticks to 6.8%. Nevertheless, with the exception of past 3-4 months, the unemployment rate this year has hardly been higher than what it was in 2014. The economy grew significantly below trend in 2014 and will likely grow only a tad faster in 2015", says Societe Generale. 

This actually implies that Chile's labour market has been significantly more robust than expected. A stronger than expected labour market has been one of the factors keeping inflation from moderating (CLP depreciation being another crucial factor) and also forcing change in the BCCh's language recently. 

"On the growth front, it has helped consumption to stay afloat in a weak investment and growth environment. Nevertheless, with the economy's growth potential taking a significant hit from the commodity downturn, the unemployment rate is likely to be higher in the medium term, recent robustness notwithstanding", says Societe Generale.