Industrial activity in Spain experienced its worst growth figure in July in the last three years after growing 0.8% compared to the previous year. The industrial production index is thus below the same month of July 2018, when the increase was 1%, and is three times lower than the vigorous 2.5% recorded two years ago.
If compared to June, the activity in the factories contracted by 0.4%, adding its second consecutive month in red numbers and the fourth in the year march. On average this exercise, the growth of industrial activity is 0.7%, well below the Gross Domestic Product (GDP) of the country and an unknown figure since 2013, when the country was still in recession and economy fell at rates of 1.2%.
Behind this paralysis is the fall in the production of durable goods, greatly affected by the sales crisis that the automobile sector is experiencing in Europe. This industrial division has a negative growth of 1.6% until July, to which the falls of the energy industry (-0.5%) and that of intermediate goods (-0.6%) are added. There are specific sectors such as metallurgy, wood or paper where no such negative growth was observed since the last recession.
On the other hand, the good performance of the non-durable consumer industry and the competitive branch of national capital goods, with growth in both cases of 2%.
Summer in Spanish factories has been very negative. The industrialists have stopped machines before the collapse of the orders of the last months and have chosen to take out the stock of their warehouses to fulfill the orders. This is a defensive cost adjustment mechanism that has sunk production "at the strongest pace in almost six and a half years" and has led to a reduction in personnel at the facilities, explained the consultant IHS Markit last week, which analyzes Monthly evolution of the sector through a survey of 400 industrialists.
These data and the global economic outlook for the coming months have generated among the businessmen a climate of pessimism about their future activity. "The concern about the continuation of the recent weak demand trend and the concern that the current global recession deepens has had a negative impact on confidence," the report details.
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