- Prior 45.1
Despite some improvement, Spain’s manufacturing sector remains in contraction as a decline in both output and sales is still proving to be a drag. Job losses are also becoming more evident now, so that is a point of concern for the months ahead. HCOB notes that:
“Spain’s manufacturing sector remains in reverse gear. In November, factory output continued to decrease, revving up the
decline a tad faster than the previous month. Other indicators like new orders, purchase of goods and backlog of orders are
shrinking too, but at a much slower pace than in October. These indexes partially reversed the falls of the month before.
Interpreting a one-off change in the direction of monthly indexes always demands caution. And so do we, as it is the
consumer goods sector taking the wheel, while in the investment goods sector, which is a more reliable cyclical indicator,
things have worsened instead.
“Producers of consumer goods are growing against the tide. And it looks as if growth in this sector, which started in October
may continue as the order situation improved as well. Consumer goods companies are even flexing their muscles by upping
their selling prices while input costs fell a bit, supporting profit margins. In addition, it is this sector which is mainly
responsible for the fact that overall cuts of employment have softened significantly in November. Contrasting with this more
positive development, the intermediate and investment goods sectors both experienced further sharp decreases in output
and orders.
“Confidence in the future stays on the positive side, but it’s lingering below the historical average. Asking firms about their
worries, political uncertainty was a big issue casting a shadow on sales and production. However, as the much-awaited
government formation has taken place in mid-November, political uncertainty may take more of a backseat during the next
months.”