Spain: economic indicators monthly changes
In September, the European Commission’s economic sentiment indicator fell to its lowest level of the year in Spain. This reflects a slowdown in activity which, according to our forecasts, will result in a slowdown in growth to 0.3% q/q in Q3 and 0.2% q/q in Q4. Inflation is also regaining ground and is again weighing on household confidence, as is the modest deterioration in the unemployment expectations index. It should be noted that the outlook for price developments differs quite significantly depending on the sector, according to the European Commission’s survey: it indicates a new pullback in price pressures in construction (-1.9 pts) and industry (-1.6 pts, the lowest since January 2021), while an upturn is observed in services (+3.1 pts), and more particularly, retail sales (+10 pts).
The consumer price index (CPI) rose 3.3% year-on-year in September on an harmonised basis (3.5% for the national measure), i.e. the third consecutive month of increase. Deflation in the energy component remains significant (-14.0% y/y), but its magnitude will decrease significantly in the coming months, before returning to positive territory, due to the current rise in oil prices and unfavourable base effects. Inflation in most major food items (eggs, milk, fresh vegetables) remains above 10% y/y; despite its small weight in the CPI basket – only 0.5% – olive oil, for example, continues to record impressive price increases (+41.9% y/y) and thus contributed 0.22 percentage points to headline inflation in September. Inflation in services has stabilised at a high level (4.7% y/y).
GDP growthJob creation slowed significantly this summer compared to the previous quarter (+15,651 net creations per month on average in Q3 after +52,196 in Q2), but the labour market has been able to withstand the interest rate shock and the slowdown in activity in the euro zone up until now. This job resilience should support household consumption, in addition to likely new government measures to protect purchasing power. While some decisions have already been announced in the 2024 budget plan, sent to the European Commission on 15 October (rise in retirement pensions, 2% increase in public service remuneration), others may be added once the new government is in place, which may, however, take some time.
Article completed on 16 October 2023
