Chile: Economic weakness persists but the worst could be over - Wells Fargo

According to analysts from Wells Fargo economic weakness persisted in July in Chile, as shown by the economic activity index (IMACEC) that rose only 0.5%in July (year over year).

Key Quotes:

“The IMACEC economic activity index increased 0.5 percent in July compared to a year earlier, versus 0.1 percent in June. The mining economy was down 3.1 percent on a year-earlier basis, while the non-mining sector increased 0.8 percent, year over year. However, weakness in the mining sector seems to be fading, as the mining sector grew 2.4 percent on a seasonally adjusted basis compared to June, while the non-mining sector decreased 0.2 percent.”

“Still, the news coming from the Chilean economy is not great even if there are signs that the worst of the slowdown may be over. Industrial production or July was down 1.8 percent, year over year. This was an improvement from an upwardly revised collapse of 3.6 percent during the 12 months ending in June. Within the industrial sector, one of the biggest culprits for July’s industrial production weakness was a 4.4 percent decline in manufacturing production compared to an upwardly revised drop of 2.2 percent during the 12 months ending in June. This was the largest year-over-year decline for manufacturing production.”

“Although production activity has remained soft there are some indications that consumer demand is improving or at least not weakening further. Real retail sales were up 4.6 percent in July compared to an increase of 1.0 percent for the year ending in June. Real retail sales are up 3.7 percent year to date through July. The strength in real retail sales was also observed on a seasonally adjusted basis as this index increased 0.8 percent in July compared to June.”

“Although the Chilean economy has continued to be mired in a rough patch early in Q3, there are some signs that the worst may be over.”