17 June 2009

Chile Construction May Be Near Bottom, Chamber Says

By James Attwood and Nathan Gill
     June 17 (Bloomberg) -- Chile’s construction industry may bottom out next quarter as unemployment in the industry peaks at 21 percent, about double the national rate, according to the country’s Chamber of Construction.
     “In October we were falling without a parachute, and now we’re falling slowly,” Chairman Lorenzo Constans said today in an interview from his Santiago offices. “We’re closer to a trend reversal, but the recovery’s going to be very slow.”
     Construction may contract about 2.5 percent this year while new housing sales, which rose 8 percent last year, slide as much as 25 percent, he said. Job cuts in the industry probably will reach 120,000 by September and end the year at 100,000, according to the chamber.
     Real-estate developers such as Socovesa SA have rallied this year as the central bank slashed the benchmark lending rate to a record low and the government started spending savings from copper exports to cushion the economy from the global slump. The building industry has improved since the last quarter of 2008 and new government subsidies may help, Constans said.
     “There are indications that things in construction are a little better but it’s still very negative,” he said.
South America’s fifth-biggest economy probably will contract in the second quarter after shrinking in the first, the central bank said yesterday. For the year, the bank forecasts that the economy may grow 0.25 percent or shrink 0.75 percent, according to a report it published on May 13.
     Construction, which probably will stabilize next year, has avoided “catastrophe” because of “prudence” by lenders and building companies and as prices remain steady, Constans said.