The Bde released its economic bulletin for November 2012. A few data sets that are of interest are the following (I will try not to duplicate previous comments which were made based on data of the September Economic Bulletin):


The investment outlook is one of definite deterioration both in construction and equipment, especially since 2011Q3. Domestic demand is dropping 3-4%, something which is reflected in demand for imported goods and services. Exports are showing positive rates of growth but reflect the Euro wide recession since the double digit rates of 2010 are now closer to 3%. This is also quite evident in export (by region) data:


After rebounding strongly during 2010 and most of 2011, both EU/Euro and OECD exports are quite stagnant in 2012 with only other regions (China, OPEC, other American countries) providing increased demand. Since most of Spanish exports are towards the first two group of countries, the data (along with current macro projections for the relevant regions) do not provide an optimistic short-term future perspective for an export-led recovery.


Household final consumption deflators are still around 2.5% making a CPI-based REER devaluation rather difficult. What is interesting is the fact that import deflators are more than double export deflators. Depending on the import share of exports this fact could create difficulties in maintaining current export deflators in the long-run without any further drop in employee compensation and/or profits.


Labour force participation rates seem quite constant in the long run which means that changes in unemployment mostly happen because of employment and not participation changes. There’s a worrying trend of outright negative population change during 2012 which could be a sign of emmigration.

Another problem is the fact that all sectors of activity show negative employment changes with industry and construction leading the way with large (double digit in the case of construction) rates.


Even services (which account for the largest part of Spanish GDP) are now in deeply negative territory (-3.5%) which makes finding employment in a different sector (for instance moving from construction to services) extremely difficult. Large unemployment numbers are most likely to persist until domestic demand rebounds substantially.