(Rewrites throughout, adds details, context, comments)
SANTIAGO Dec 29 Chilean manufacturing and
copper production were relatively weak in November, government
data showed on Thursday, likely paving the way for a short-term
interest rate cut by the central bank.
Manufacturing fell 2.1 percent in November from
a year earlier due to weak food and beverage, chemical, and
non-metallic mining production, Chile's INE statistics agency
said, slightly underperforming a Reuters forecast for a 1.9
Production of copper, by far Chile's most
important export, fell 1.3 percent in annual terms, which the
government attributed to maintenance at an unspecified mine and
falling ore grades.
Both numbers represented improvements on a moribund October,
during which the lingering effects of a 2015 volcanic explosion
severely affected the nation's salmon industry and work
stoppages cut copper production. Manufacturing rose
4 percent in November in monthly terms, while copper production
rose 7.8 percent in comparison with October.
Retail sales were also a bright spot, registering a 5
percent jump in November year-on-year.
Overall, however, analysts predicted mediocre yearly
manufacturing figures would likely justify a rate cut in the
benchmark interest rate that many observers see as imminent.
In a poll of 63 traders published by the bank on Wednesday,
respondents predicted a 25 basis point rate cut in January, and
another 25 basis point cut in the next three months.
"Overall, despite some improvement from the previous month,
the industrial sector remained weak..., suggesting that 4Q2016
will register a considerable annual contraction," said Goldman
Sachs economist Alberto Ramos.
"We believe the November activity figures reinforce the case
for a rate cut, and expect the [Monetary Policy Committee] to
deliver a 25 (basis point) cut to 3.25 percent at the January
In its quarterly Monetary Policy Report released last week,
Chile's central bank predicted gross domestic product growth in
the top copper exporter of 1.5 to 2.5 percent in 2017 and 1.5
percent in 2016.
In a note to clients after Thursday's data, BBVA predicted
that government data next week will show economic activity
rising 1 to 1.5 percent in November.
(Reporting by Gram Slattery; Editing by Bernadette Baum)