UPDATE 1-Chile Apr output shrinks excl quake, demand strong

* Data excluding quake shows industry still sluggish

* Strong demand signals recovery underway

* Data seen raising chances of a June rate rise
(Recast, adds analyst quote and background)

SANTIAGO, May 28 (BestGrowthStock) – Chile’s industrial production
(CLIP=ECI: ) shrank a seasonally adjusted 0.9 percent in April,
excluding the impact of a huge earthquake, but strong demand is
seen raising the chances of a June interest rate increase.

Industrial output rose a seasonally-adjusted 21.5 percent
when factoring the disaster in, government data showed on
Friday. Output fell 1.3 percent in April compared with the same
month last year, after a 17.4 percent year-on-year March fall
reported last month.

March was the the first full month of data following the
devastating 8.8-magnitude quake, which killed hundreds of
people and hammered the wood pulp, oil refining, steel, fruit
and wine industries of south-central Chile.

The mainstay mining sector was largely unscathed, and
output of copper from the world’s largest copper producer rose
6.4 percent in April from the same month a year ago..

“The performance of the industrial sector continues to be
very sluggish,” said Alberto Ramos, a senior analyst with
Goldman Sachs in New York. “The new signal that we get from the
data is that the demand side indicators are all very strong.”

“I think that the signal is bullish and probably will lead
the central bank to hike (rates) in June,” he added.

Chile’s central bank will likely raise its benchmark
interest rate by 25 basis points from an all-time low of 0.5
percent in June, joining a regional tightening cycle led by
Brazil and Peru, a Reuters poll of economists and market
players published on May 14 showed. [ID:nN14183253]

Stock Market Report

(Reporting by Antonio de la Jara, Simon Gardner; Writing by
Alonso Soto; Editing by Theodore d’Afflisio)

UPDATE 1-Chile Apr output shrinks excl quake, demand strong