Labour market Spain
In March, the registered unemployment in the Social Security fell by 4.89% year-onyear to amount to 3,255,084 unemployed, while the number of affiliates increased by 2.93% to a total of 19,043,079.
Tourism sector Spain
In 2018, the Synthetic Indicator of Tourism GDP in Spain (ISTE) reported an annual increase of 1.9%, which is 0.7pp below the increase in GDP (2.6%) and exhibits a change in trend after five years of aboveaverage growth relative to the whole economy.
This evolution is mainly explained by fewer foreign tourist arrivals in Spain, with the average increase dipping down to 2.3% yearon-year in 2018 compared with 8.7% in 2017 (82.8 million tourists). In the same vein, the average spending per tourist increased by 2.2% year-on-year, but it is still 1.2pp lower than in 2017.
Credit crunch
In Spain, due to the moderation of economic growth, the increase in default, and the negative impact of low interest rates on bank operating margins has led to the tightening of the eligibility criteria to grant loans as of Q3 2018, especially those related to consumption and acquisition of housing.
* (Entities tightening criteria considerably × 1) + (entities tightening criteria to some extent × 0.5) – (entities relaxing criteria to some extent × 0.5) – (entities relaxing criteria considerably × 1)
Glass ceiling in Spain
In 2018, the number of women in management positions in Spain soared by a record-high of 45.8% per year, representing 35.9% of the total, with the largest increase in the small business segment (82% of the total of 43,700 new management positions).
Despite this positive development, it is observed that:
• In medium and large sized companies, only 25% of management positions are held by women.
• The lack of balance and maternity1 significantly reduce the participation of women in management positions to 34.5% for ages 35-44 which is 19.1pp lower than those aged 25-34 (53.9%).
1 The average age at which Spanish women have their first child is around 31 years old (33.8 in the case of women with higher education), and 30% have it when they are 35 years old.
Trade uncertainty
In January, world trade fell by 1.8%*, a record low since 2009, mainly due to the uncertainty generated by the trade war between the US and China, and the absence of a final withdrawal agreement for UK’s departure from the EU.
A total of 0.9% of world GDP is exposed to the trade risk of Brexit, while in the Eurozone this figure rises to 2.7% of its GDP.
Eurozone Manufacturing PMI
In March, the Eurozone Manufacturing PMI continued in the contraction zone* (47.5 points), its lowest level since 2013. The deterioration in the expectations of industrial production is mainly explained by the economic slowdown in the Eurozone and the uncertainty about the future evolution of the US trade policy towards Europe, especially in the automotive sector.
In the Eurozone, the Manufacturing PMI remains in decline and contracted in France (49.7 points), Italy (47.4) and Germany (44.1). An evolution that contrasts that of China and the US, where they were in an expansive zone (50.8 and 55.3, respectively).
US recession risk
In the US at the end of March, for the first time since 2007, the yield on the 3-month treasury bill exceeded that of the 10-year treasury bond, mainly due to the waning expectations of the economic agents and the gradual tightening of the monetary conditions of the Fed in 2018. As such, it increases the probability that the US economy will enter a recession after 2020.
Even empirical evidence shows that within 8 to 24 months of the yield curve1 inversion, an economic recession occurs. In turn, the Fed has revised down its growth prospects to 2.1% per year in 2019 (0.2pp lower than the previous forecast) and has announced that it will maintain interest rates in the range of 2.25%-2.5% in 2019.
This scenario limits the room for US monetary policy manoeuvre since its real interest rate2 currently stands at around 0.3% compared with the 2.1% at the end of 2007.
