Industrial Production, Spain

In January, the Industrial Production Index (IPI) decreased 2.1% year-on-year, its biggest drop since March 2019 (-2.7%). By sectors, all have fallen, especially in energy (-5.8%) and consumer goods (-1.8%).

By Autonomous Community, the IPI only increased in Navarra (8.6%) and Galicia (2.9%), while the largest declines were recorded in Andalusia (-12.1%), Asturias (-8.1% ) and Balearic Islands (-6.8%).


Business development, Spain

In 2019, business development decreased 1.2% year-on-year (vs. +1.1% in 2018), down to 94,840 companies, far from its maximum of 150,000 in 2006.

By sectors, services accounted for most of the companies created (74.7%), followed by construction (13.8%), industry (8.8%) and agriculture (2.7%).

98.6% of the companies were allocated as limited companies, and 0.4% as public limited companies. This data responds to the size of our business structure characterized by the large number of small and medium enterprises.


Labour cost, Spain

In Q4 2019, the labour cost per hour worked increased 3% year-on-year, 1.4 percentage points more than in the same quarter of 2018. In the year as a whole, the average rate was 2.9%, compared to 0.5 % in 2017 and 1.6% in 2018.

By components, in Q4 2019, other costs registered an increase of 4.4% year-on-year, and wage costs 2.5%.

By industry, the annual increase in the real estate sector stands out (6.6%), compared to the lower growth in the electricity supply sector (0.8%).


The impact of the coronavirus on the global economy

Economic Sentiment

In February, the PMI composite indicator fell 6.1 points in the contracting zone (46.1 points), its lowest level since May 2009. The deterioration occurred both in the manufacturing sector (down to 47.2 points) and in the services sector (down to 47.1 points).

By country, the paralysis of the Chinese economy facing the closure of factories located at the epicenter of the epidemic, and the restrictions on the mobility of its citizens were emphasized.

In this scenario, the Chinese composite PMI contracted down to 27.5 points due to sharp falls in both the manufacturing and services sectors.


Monetary stimulus of Central Banks

Uncertainty in financial markets, given the spread of the coronavirus and its possible repercussions on the real economy, has forced the central banks of the major economies to adopt monetary stimulus measures to support confidence among economic agents.

• The Fed has lowered the official interest rate by 50 bp (down to the 1% -1.25% range).

• The Australian Central Bank cut rates by 25 bp to 0.5%.

• The Bank of Canada reduced them by 50 bp to 1.25%.

Indeed, the ECB has increased its quantity easing (QE) from €20 to 120 billions of € until the end of the year.


Evolution of oil prices

Since the beginning of the year, as a consequence of weakening global demand, oil prices have accumulated notable decreases.

In this context, the lack of consensus at the OPEC meeting to maintain its policy of cuts, and the increase in production by Saudi Arabia by 10 million barrels per day, have led to the collapse in oil prices.

Specifically, in the second week of March, the price per barrel of Brent contracted to $31 per barrel (-31.5%), and West Texas to $30 per barrel (-27.4%), registering the biggest one-session drops since 1991. As a result, in 2020 both Brent and West Texas per barrel prices have accumulated decreases of 46.5% and 45.1%, respectively.


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