Itaú BBA - CHILE – Despite higher unemployment, positive signs
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CHILE – Despite higher unemployment, positive signs

March 29, 2018

Rising participation hints at improved expectation of finding jobs

The unemployment rate picked up by more than expected in February, nevertheless, the breakdown shows some promising signs. The unemployment rate came in at 6.7%, 0.3 percentage points above that recorded one year ago, and above market expectations of 6.6% and our 6.5% call. The surprise partly comes from a faster increase in the labor force, growing 3.0% (the highest rate since 2011), a possible sign of the improved private sentiment and expectation of finding jobs. Overall, the participation rate increased 0.7 percentage points from one year ago. Public employment remains the main job driver, but the formal private sector is consolidating signs of improvement.

Although below the rise in the labor force, employment grew 2.7% year over year (+218 thousand jobs), the fastest pace since the quarter ending in February 2014. Salaried posts grew 3.8% year over year (1.7% in 4Q17), still led by the 16% rise in public jobs (+136 thousand). The public sector posts created (public administration, health and education posts) accounted for 1.7 percentage points of the total job growth. However, private salaried jobs grew 1.6% (+77 thousand jobs; -0.7% in 4Q17) and accounted for 0.9 percentage points of total job growth. Recovering employment in agriculture, IT, hotels and restaurants boosted private job growth. Meanwhile, self-employment fell 0.2% from one year ago, shedding 3 thousand jobs (the first negative figure since 2Q15).

The positive signs from the improvement in private employment bodes well for consumption. As the economy advances on its recovery path, a re-composition from self-employment and public posts towards the formal private sector would occur. We expect the unemployment rate to remain broadly stable at 6.7% rate this year.


Miguel Ricaurte
Vittorio Peretti


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