conditions ( figure 4 ). in our country, as i showed some minutes ago, wage indicators have posted significant expansion rates, despite the weak outlook on the employment side. this increase is explained by a mix of factors, such as the recovery of real wages after the high inflation of previous years and the upward adjustment of the minimum wage. measured in real terms, the annual increase in the labor cost index ( prepared by ine ) has exceeded its historical averages in recent months. at the same time, indicators obtained from administrative records ( information from unemployment insurance administrators afcs ) show that the real annual variation in wages has been high over the last year. this has had direct effects on some cpi items, while at the same time adding to the cost pressures already noted for businesses. on the activity side, although third - quarter gdp was in line with our september assumptions, domestic demand grew less than expected. by sectors, manufacturing and copper mining performed favorably, while financial and business services underperformed, adding to the prolonged sluggishness of construction ( figure 5 ). as for this quarter, the october imacec showed an increase in activity after falling in september. these results include the impact of temporary supply - side elements on some items, factors whose recurrence added volatility to figures throughout the year. for the same reason, as we have said repeatedly, one should try to infer trends rather than focus on a single data point. the data for the rest of 2024 will also be subject to these factors, particularly due to the combination of december holidays. the lower dynamism of expenditure owes to a weaker private consumption, which was counteracted by greater public consumption. at the same time, the economy has been driven by external demand, as reflected by the evolution of exports of goods and services ( figure 6 ). the slowdown of private consumption occurs in a context of low job creation performance. the data reported by surveys and administrative records show a fall or stagnation in several dimensions, such as formal employment ( afc and afp data ), employment in some lagging sectors ( ine ) and also brackets of lower educational levels ( ine ) ( figure 7 ). contributors to the slow pace of job creation are the meager investment that has been seen for several quarters in the non - mining sectors, the evolution of activity in the most job - demanding sectors — such as construction — and the rise in compensation costs. the real wage bill has tended to

jose de gregorio : the monetary policy report and the financial stability report presentation by mr jose de gregorio, governor of the central bank of chile, before the finance commission of the honorable senate of the republic, santiago de chile, 16 june 2010. * * * introduction mr. president of the finance commission, senator camilo escalona, senators : i am grateful to this commission for the invitation to the board of the central bank of chile to share our views on recent macroeconomic and financial developments and their implications for monetary policy. these are detailed in our monetary policy report ( ipom ) of june 2010 and in our financial stability report ( ief ) for the first half of 2010. we are presenting our reports in the midst of a unique scenario for the central bank. on the one hand, both the chilean economy and the global economy have been on a sustained path of recovery since the second half of 2009. this path has not been free of difficulties. the earthquake and tsunami that swept chile last 27th of february, and which was a major part of our concerns when we visited this commission in march, had negative effects on the february and march output figures. as we said in that occasion, those disruptions were restricted to the short term, as is evident in the strength of the most recent indicators. this does mean that the hardest hit areas are in a precariousness situation, especially in housing. in addition, despite a promising domestic growth scenario, the chilean economy remains operating below full capacity with above normal unemployment levels. this limits inflationary pressures, which is consistent with maintaining a highly and exceptionally expansionary monetary policy ( figure 1 ). on the other hand, financial stress in europe is raising the level of uncertainty regarding the speed with which the world economy will recover and the smooth functioning of global financial markets. although the baseline scenario in the two reports we are presenting today assumes that both the world economy and the chilean economy will keep growing in the coming quarters, the international situation, particularly in europe, together with its impact on our economy and its implications for monetary policy will have to be assessed carefully and continually. all these elements, which are taken into account in every monthly monetary policy meeting, determined that in yesterday ’ s meeting we began the process of normalizing the significant monetary stimulus currently in place in chile. this is the natural step after the gradual withdrawal of the extraordinary facilities for liquidity provision and the term liquidity facility flap, implemented in recent years to deal with the severe effects