Itaú BBA - CHILE – Some positives in November labor market figures

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CHILE – Some positives in November labor market figures

Dezembro 31, 2019

Despite the November surprise, we expect a weakening labor market.

The national unemployment rate in the quarter ended in November ticked up 0.1pp over twelve months to 6.9%. However, it came well below our 7.9% call and the Bloomberg market consensus of 7.6%, which were in line with recent reports of a cumulative job destruction of 140 thousand posts since the protest activity began in October. Surprisingly, total employment growth improved to 1.4% yoy in the quarter ended in November, from 1.2% in October (2.1% in 3Q19), while the labor force growth was 1.5% (1.2% one month before and 2.1% in 3Q19). Additionally, participation only marginally fell to 59.2% (59.4% one year before). Meanwhile, in the greater Santiago area, employment growth also improved to 1.5% (0.2% in the quarter ended in October), while the unemployment rate was 7.8%, above the 7.3% recorded one year earlier. The full impact of protest activity would only be seen in the 4Q19 data print next month, as these data still includes the September (pre-crisis) measurement.

In the quarter ending in November, the salaried payroll growth boosted job creation. Private salaried employment grew 1.4% yoy in November (+0.8pp contribution to the headline figure), up from 0.8% in the quarter ended in October (1.5% in 3Q19), while public salaried employment posted the lowest growth rate since 1Q19 (at 3.4% yoy, from 4.9% in the previous month and 6.7% in 3Q19). Self-employment growth improved to 1.0% (0.8% before and 0% in 3Q19) but remains below the recordings in the first half of the year. Overall, job growth was lifted by construction, commerce, and health activities, while manufacturing was the key drag in the quarter.

With activity set to underwhelm, the labor market would likely show signs of weakness ahead. Hence, we expect job growth to moderate and the unemployment rate to increase in 2020.

Miguel Ricaurte
Vittorio Peretti

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