GDP shows quarter-on-quarter drop of 0.3%

INEThe National Institute of Statistics have released their quarterly report for the Spanish economy showing a 0.3% contraction during the first quarter of the year.

The annual and quarterly figures coincide with that of the advance estimate of quarterly GDP that was previously published on 30 April.

Summary of Main Points

Year-on-year growth stands at -0.4%, seven tenths lower than that recorded the previous quarter.

The contribution of national demand to aggregate growth is three tenths lower than that for the previous quarter, standing at -3.2 points, whereas the contribution of external demand to quarterly GDP decreases four tenths (from 3.2 to 2.8 points).

Employment decreased at a year-on-year rate of 3.8%, half-a-point higher than in the fourth quarter of 2011, indicating a net reduction of 655,000 full-time jobs in one year. In turn, the hours actually worked decrease at a year-on-year rate of 3.4%.

The growth in the unit labour cost remains at -2.5% this quarter, three points below the implicit GDP deflator.

Full Report

Gross Domestic Product (GDP) generated by the Spanish economy in the first quarter of 2012 registered a 0.3% decrease with regard to the previous quarter, this rate being similar to that estimated for the previous quarter.

In quarter-on-quarter terms, the growth rate of GDP was -0.4%, seven tenths lower than that recorded the previous period, due to the greater contraction of national demand, and to a lesser contribution of external demand.

Within the European scope, both the European Union as a whole and the Eurozone registered zero growth (0.0%), as compared with the previous quarter. Considering the performance of the main European economies, Germany (0.5%) and Austria (0.2%) registered positive growth, France recorded no growth (0.0%), and the rest experienced decreases in GDP, which were more moderate in the cases of the Netherlands (-0.2%), the United Kingdom (-0.2%) or Spain (-0.3%), and more intense in the case of Italy (-0.8%).

The quarter-on-quarter growth of Spanish GDP in the first quarter of 2012, analysed from the expenditure perspective, reflected a more negative contribution of national demand, which reached -3.2 points, as compared with the -2.9 points from the previous quarter, and likewise, a positive contribution with regard to external demand, which reached 2.8 points, four tenths lower than that registered the previous quarter.

National demand

The more negative contribution of national demand to aggregate activity this quarter was the sole result of the intensification of the contraction of investment in fixed capital, given that final consumption expenditure, aggregated, registered the same growth rate as that recorded the previous quarter.

Household final consumption expenditure saw a half-point reduction in its negative growth, from -1.1% to -0.6%. Considering the different components of expenditure, consumption of services presented positive growth rates, albeit lower than those from the previous period. Conversely, the consumption of goods continued to register negative rates, though in the case of durable and semi-durable goods, a certain recovery was observed this quarter, which determined the global performance of the aggregate.

Moreover, employee remuneration, the main household resource, experienced an increased contraction, reaching -3.3%, which resulted in a reduction in the savings rate thereof.

Final consumption expenditure of the Public Administrations contracted 1.6 points, reaching -5.2%. The decrease in the total purchases of goods and services by these administrations (approximately 13%) contributed particularly to this result. In turn, employee remuneration also decreased, but much more moderately (approximately 1%).

The gross formation of fixed capital experienced a two-point decrease this quarter, dropping from -6.2% to -8.2%. Considering the different types of assets, tangible assets presented a more pronounced drop than that for the aggregate (from -6.5% to -8.8%), with more significant decreases in the case of capital goods than in construction. Lastly, investment in intangible assets recovered from -0.3% to 2.2%.

Demand for capital goods recorded a 3.3-point contraction, from -2.7% to -6.0%, in line with the evolution of the industrial production indicators, turnover and imports for this type of good. The rate of the decrease in investment in machinery (-5.5%) was less intense than in the case of transport equipment assets (-7.3%).

Investment in construction assets experienced a decrease of two points, dropping from -8.2% to -10.2%. Both dwellings and infrastructures and other construction presented decreasing profiles, which were more intense in the case of the latter (-14.3%) than in the case of the dwellings (-5.8%).

External demand

The contribution of the net external demand of the Spanish economy to quarterly GDP dropped four tenths this period, decreasing from 3.2 to 2.8 points. This result occurred as the joint consequence of a deceleration of exports, linked to a greater contraction of imports, though the latter to a lesser extent.

Exports of goods and services saw a three-point slowdown in growth, from 5.2% to 2.2%, in line with the slowed evolution of the economies of the countries to which these exports were sent, mainly in the European Union. By component, a less intense slowdown was observed in the case of goods (from 2.9% to 1.7%) than in the case of services (from 13.9% to 6.5%). In turn, purchases by persons resident in Spain, customary with a more moderate tourist activity, registered a 1.0% decrease, this being the first negative rate recorded since the first quarter of 2010.

Lastly, imports of goods and services experienced a decrease of 1.3 points in its growth rate (from -5.9% to -7.2%), in line with the lower activity level. All of its components presented drops, of a greater amount in the case of services (-6.9%) than in the case of goods (-7.2%). Finally, purchases of persons resident in the rest of the world registered a decrease of 8.7%.

Supply

The analysis of the macroeconomic table, from the supply perspective, presented similar features to those published the previous quarter. Thus, moderate growth was recorded in the added value of the primary branches and of services, and more intense decreases in the added value of the manufacturing and construction activities.

The gross added value of the industrial branches experienced an intensified drop in the first quarter of 2012, going from -0.4% to -3.0%, in line with the contracting evolution of national demand, and the moderation of the exports of industrial goods. In particular, regarding the manufacturing industry, the decrease was somewhat more intense (from -0.1% to -3.9%).

In the same way as the demand for assets linked to construction activity, the gross added value of construction saw a 1.6-point increase in its negative growth, from -3.7% to -5.3%. As commented in the section dedicated to demand, the more unfavourable performance of both buildings under construction and other construction yielded this result.

The added value of the services branches saw a slight decrease in growth this quarter, from 0.9% to 0.8%. Within these branches, those with the best results were those linked to information and communications technologies and to trade, in line with the recovery of household expenditure on consumer goods. At the opposite end of the spectrum, a lesser rate of progress was observed in those activities related to tourism and real estate.

Lastly, the primary branches saw a half-point acceleration in the growth of their added values, reaching 0.8%, in accordance with the evolution of the agricultural and livestock activity indicators.

Employment

Employment, measured in terms of full-time equivalent jobs, experienced a year-on-year decrease of five tenths, standing at -3.8%. This result indicated a reduction of more than 655 thousand net full-time jobs in one year. On an aggregated scale, the results of all of the branches activity were worse than those from the previous quarter.

In year-on-year terms, construction lost more than 310 thousand jobs, services almost 245 thousand, industry almost 87 thousand, and finally, the primary branches lost more than 13 thousand.

The contraction of occupied employment was registered with greater intensity en wageearning employment (dropping from -3.2% to -4.2%). In turn, non-wage-earning employment presented a less negative growth rate this quarter (going from -3.9% to -0.9%).

The number of hours actually worked by the persons employed in the economy dropped from -1.7% to -3.4% this quarter. The difference between this evolution and that of full-time equivalent jobs was due to the lesser increase in the average full-time working day, which went from 1.6% to 0.4%.

Using the joint consideration of the growth of quarterly GDP and the occupied employment data, it was possible to deduce that the year-on-year variation of the apparent productivity by equivalent job post decreased two tenths, from 3.7% to 3.5%, whereas the growth of the apparent productivity per hour actually worked increased 1.1 points, from 2.0% to 3.1%.

You can access the complete report including charts and graphs here: Quarterly Spanish National Accounts – First Quarter 2012

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