(Adds unemployment rate, context on central bank)
LIMA Dec 15 Peru's economy grew by a
weaker-than-expected 2.12 percent in October from a year ago,
the slowest expansion in more than a year as a sharp drop in
construction activity dragged on a mining-powered recovery,
government data showed on Thursday.
A Reuters poll had forecast a 3 percent expansion for
October. In September the economy grew 4.1 percent.
Construction shrunk 16.51 percent year on year in October on
stalled public works, state statistics agency Inei said, the
sector's worst monthly contraction in 12 years. Manufacturing,
another sector vital to job growth, slumped 3.31 percent.
Mining grew 21.56 percent in October on the back of an
ongoing surge in copper production from new and expanded mines
commissioned during the commodities boom of the previous decade.
But sectors linked to domestic demand, including retail sales,
agriculture and services, grew by 2 percent or less.
The slowdown in October followed the July 28 start of the
new government of President Pedro Pablo Kuczynski, a former Wall
Street banker who has promised to bolster domestic demand by
investing in infrastructure projects and cutting red tape.
But public investments by the central government fell 28
percent in October due to a lack of work on projects such as
highways and bridges, compounding a similar contraction in
spending by local governments, Inei said.
The unemployment rate was 5.8 percent in the Sept-Nov
period, unchanged from the same period a year ago while
underemployment rose by one percentage point.
October's disappointing growth rate could build pressure for
the central bank to consider lowering the benchmark interest
rate. The bank is widely expected to hold the rate steady at
4.25 percent for the 10th month in a row later on Thursday.
The central bank said last month that the economy would
likely grow by about 3 percent in the fourth quarter
, which would mark a sharp slowdown from the 4.4
percent expansion in the third quarter.
The annualized economic growth rate slipped to 4.22 percent
in October, from 4.34 percent in September, Inei said. In the
first 10 months of the year the economy grew 3.98 percent from
the same period a year ago.
The government has forecast a 4 percent expansion for this
year, compared to 3.3 percent in 2015.
October's activity rate was the weakest monthly reading
since May 2015. Economic activity fell 0.3 percent in October
from September on a seasonally adjusted basis, Inei said.
(Reporting By Teresa Cespedes; Writing by Mitra Taj; Editing by
Meredith Mazzilli and Andrea Ricci)