Spain: economic indicators quarterly changes
While still high, inflation has fallen sharply since its peak in July, thanks to measures to freeze energy prices, most of which will be maintained in 2023. At the end of December the Prime Minister Pedro Sanchez also unveiled a new budget of EUR 10 bn intended to support households and which includes the temporary abolition of VAT (from 4% to 0%) on a list of essential products.
This will help to contain food price inflation and counteract the upward pressure on prices caused by the end of the fuel rebate since 1st January 2023. As household confidence is strongly correlated with inflation it rebounded in the second half of 2022, but is still well below what it was before the war in Ukraine.
The labour market has been resilient despite the multiple shocks in 2022. According to the Spanish state employment service (SEPE), employment in the country rose by 3.9% over 2022 as a whole. The momentum slowed very slightly in December: recruitment fell by 8,300, the first drop since April 2021. However, PMI surveys do not suggest that a decline in recruitment is on the horizon. The composite PMI index for employment rose in Q4 and moved back above the 50 threshold.
The clear slowdown in economic growth in Spain in Q3 2022 could continue this winter, resulting in a potential downturn in activity. Industrial production has been on a downward trend since autumn, impacted by the fall in activity in the energy sector. The decline was very much greater in November 2022 (-8.3% m/m), following on from an already significant contraction the previous month (-3.1% m/m). However, manufacturing activity remained at a stable level, thanks to an increase in the production of consumer goods.
GDP growth q/q: actual, carry-over and forecasts
Guillaume Derrien
