WRAPUP 3-Chile July industry grows, president ups GDP view

* Seasonally adjusted output growth slower than expected

* Copper output surges 6.3 percent in July

* President Pinera sees 2010 GDP growth over 5 pct

* Stronger peso unmoved by data
(Updates with graphics, peso close)

By Antonio de la Jara and Fabian Cambero

SANTIAGO, Aug 30 (BestGrowthStock) – Chilean industry grew less
than expected in July from June but surged from a year ago on
strong copper output, prompting President Sebastian Pinera to
slightly raise his 2010 economic growth view.

The upgrade reinforced expectations of new rate hikes.

Industrial production grew 1.1 percent in July from the
immediately prior month, state statistics agency INE said on
Monday. Analysts surveyed by Reuters had expected output
(CLIP=ECI: ) to rise a seasonally adjusted 2.45 percent in July.

The INE said productive capacity had yet to return to
“normal” levels prior to Chile’s devastating Feb. 27
earthquake. It said food and drink as well as chemical and wood
product output drove the rise. Paper and refined oil products

However output rose a slightly better-than-expected 3.3
percent in July compared with the same month last year, the INE
said, citing a comparison with 2009 figures, which were
depressed by the global financial crisis.

“This clearly shows we are going to have another month of
high growth and job creation in July, meaning our economy will
strengthen,” Pinera said. “This year we will grow at more than
5 (percent).” Pinera had previously forecast growth of around 5
For a TAKE-A-LOOK [ID:nN30113748]
For GRAPHICS, see: http://link.reuters.com/zuz28n
> http://link.reuters.com/puv75n

Analysts surveyed by Reuters had expected output to rise
3.0 percent in July from a year earlier. For a preview of
Chile’s July unemployment data, see [ID:nN27210807]

“The set of July leading indicators of activity suggest
that the domestic demand buoyancy seen during Q2 2010 continues
at the beginning of Q3,” Alberto Ramos, a senior economist with
Goldman Sachs, said in a note to investors.

Ramos expects economic activity to surge 6 percent in July
from a year earlier. The central bank is set to report July
economic activity, as gauged by its IMACEC index. on Sept. 6.

“Assuming no major data surprises over the next couple of
weeks, and/or major global economy developments, we expect the
central bank to deliver another 50 bp rate hike on September
16,” he added.


Chile joined Brazil and Peru in a regional monetary
tightening cycle in June, after holding its benchmark rate at a
record low in the wake of the global financial crisis and
February earthquake. It has now raised the rate by 50 basis
points three months in a row to 2 percent. For more, see
[ID:nN12145806] [ID:nN25118148]

However higher rates, widening the differential with the
United States, are luring foreign investors, exerting upward
pressure on the peso, which is trading at 7-month highs.

That in turn has prompted verbal warnings from Pinera,
Finance Minister Felipe Larrain and Central Bank President Jose
De Gregorio. However the bank is not seen intervening beyond
words unless the peso pushes 480 per dollar. For more, see
[ID:nN27258548] [ID:nN24252365]

Chile’s peso (CLP=CL: ) was unmoved by the data, and later
retreated slightly from new 7-month highs to close at
500.50/500.80 per dollar.

Industrial sales (CLIS=ECI: ) rose 1.3 percent from the
previous year.

The price of copper, Chile’s main export, rallied to its
highest level in more than three months after the data showed
output by the world’s No. 1 producer rose 6.3 percent to
454,178 tonnes in July from the same month a year earlier.

In June, Chile’s copper output dropped 0.6 percent to
465,033 tonnes from the same month in 2009, according to INE
data released last month.

Big and medium-sized companies increased their output in
July, mostly that of concentrate copper, which is used in power
lines and water pipes.

Output of Molybdenum, used in high-strength steel alloys,
rose 28.3 percent to 3,309 tonnes in July. Production climbed
3.5 percent to 20,109 tonnes in the January-to-July period
versus last year.

Chile’s copper industry, the backbone of the South American
country’s economy, emerged virtually unscathed from the Feb. 27
earthquake that killed hundreds of people and battered the wood
pulp, fishing, fruit and wine industries.

(With reporting by Bianca Frigiani, Alonso Soto and Molly
Rosbach. Writing by Simon Gardner; Editing by Andrew Hay)

WRAPUP 3-Chile July industry grows, president ups GDP view