Industrial output expands for first time since start of 2011

Industrial output in Spain expanded for the first time in two-and-a-half years, providing further evidence that a recovery, albeit a timid one, is underway after the country’s longest recession in decades.

According to figures released Thursday by the National Statistics Institute (INE), the industrial production index expanded by annual 1.4 percent in September after correcting for the number of working days. That represented the first increase since February 2011.

The economy grew 0.1 percent on a quarterly basis in the period July-September after nine consecutive quarters of declines. However, the driver of growth was the export sector, with domestic demand remaining negative.

The rise in industrial output was impacted by the fact that value-added tax hikes were introduced in September of last year, which encouraged purchases in prior months to avoid the increase. This was reflected in the fact that in August, output declined 2.1 percent from a year earlier. In the first nine months of the year, production shrank by an average 2.5 percent from the same period a year earlier.

All the indicators point to a turning point, and we are beginning to grow”

The sector that best performed in September was capital goods, with production up 6.4 percent from a year earlier after correcting for calendar effects. Output of consumer durables declined by 1.2 percent, reflecting ongoing weakness in household spending.

“All the indicators point to a turning point, and we are already beginning to grow,” M&G Valores analyst Nicolás López told Reuters. “The question is how much or how little growth, but the fact we are looking at a swing from recession to growth is clear. What is lacking is consumption, but that is normally the case.”

Output of processed fruit and vegetables climbed 29.3 percent from a year earlier, while production of other food products was up 15.4 percent. Output of cutlery and tools shrank 15.1 percent.