Recovery continued at start of fourth quarter, Bank of Spain says

The Bank of Spain said Wednesday that the latest available information points to a continuation in the improvement in the economy noted in the third quarter when GDP grew 0.1 percent from the previous three months, ending a recession which had lasted nine quarters.

In its latest economic bulletin for November, the central bank noted that private consumption figures continued to perk up with a pick-up in new car purchases as a result of the government’s direct subsidy scheme in October.

It also noted that retail sales had improved in the third quarter, although according to figures also released Wednesday by the National Statistics Institute (INE), these suffered a setback last month when they fell an annual 0.5 percent. Sales grew 2.1 percent year-on-year in September after falling every month in the past three years.

The governor of the Bank of Spain, Luis María Linde, on Tuesday told the Senate that while the domestic economy is showing signs of improvement, the pace of the recovery remains weak and does not invite complacency.

Investment in capital goods showed contradictory signs, with an improvement in quantitative terms but a deterioration in qualitative terms. Output of capital goods increased but sentiment took a turn for the worse.

As regards investment in construction, the central bank noted the pace of the contraction had slowed in the first half of the year, with the consumption of cement increasing in September from the previous month, although building permits for new homes fell “notably” in August.

The report also noted a renewed pick-up in exports of goods after certain weakness in July and August, particularly as regards shipments of capital and consumer goods. The tourist sector also consolidated the progress seen this year.

There was also an improvement in industrial activity, while the evolution of the services sector was also somewhat more positive.

The labor market also took a turn for the better, with the number of people signed up with the Social Security system increasing in October, while jobless claims decreased by 0.5 percent in the month. The trend of wage moderation also remained in place, with the average increase in salaries as a result of collective agreements in the first 10 months of the year only 0.55 percent.