• GDP grows 3.2% year-on-year in the quarter, double the euro area average
  • The dynamism of private consumption and investment remains, especially in capital goods, and exports rebound
  • The composition of growth is more balanced, with a positive contribution from external demand

The Spanish economy registered 0.8% quarter-on-quarter growth in the second quarter of 2016, slightly above that of the previous quarter and half a point higher than that of the euro area. In year-on-year terms, GDP increased 3.2%, two tenths less than in the previous quarter and double that of the euro area (1.6%). Employment grew 0.6% compared to the previous quarter and 2.9% compared to a year earlier, which means the creation of 484,300 full-time equivalent jobs in the last twelve months. These figures show that the Spanish economy maintains a strong dynamism tone thanks to private consumption, investment, especially in capital goods, and the rise in exports of goods and services.

The composition of growth is more balanced, with a contribution of national demand to the interannual advance of GDP of 3 percentage points, eight tenths lower than that of the previous quarter, and a contribution of positive net external demand of 0.2 points, after five quarters of negative contributions (-0.4 points in the first quarter of 2016).

Among the components of national demand, in quarter-on-quarter terms, the highest rate of growth in gross fixed capital formation stands out, one point up to 1.3%. This acceleration is explained by the greater dynamism of investment in capital goods and cultivated assets, whose increase reaches 2.2%, more than double that of the previous quarter (0.9%), as well as the rise in the investment in construction, which goes from decreasing 0.2% in the first quarter of the year to growing 0.9% in the second. Conversely, investment in intellectual property products fell slightly (-0.1% quarter-on-quarter), after the 0.4% increase in the previous quarter.

With respect to final consumption expenditure, that of households increased 0.7% quarter-on-quarter, three tenths less than in the previous quarter, and final consumption expenditure of Public Administrations decreased 1.6%, after of five quarters of uninterrupted increases (0.7% in the first of this year).

The greater contribution of net external demand to year-on-year GDP growth is due to a faster acceleration of exports than that of imports, with rates of 6.8% and 6.6%, respectively, higher by 3 and 1 , 2 points to those of the previous quarter. In quarter-on-quarter terms, export growth reached 4.3%, compared to the 0.4% drop in the first quarter, which is the highest rate since the third quarter of 1997, and imports accelerated 2, 3 points, up to 2.7%.

From the supply perspective, the Gross Value Added (GVA) of the services sector and that of the industry accelerated two and three tenths, respectively, in the second quarter, both registering a quarter-on-quarter increase of 1.1%. On the other hand, the GVA of agriculture, livestock, forestry and fishing decreased 0.9%, one tenth less than in the previous quarter, and the GVA of construction decreased 0.7%, compared to the zero variation of the previous quarter .

The annual rate of the GDP deflator stood at 0.5% in the second quarter, after stabilization in the first quarter. This acceleration is mainly explained by the rise in the general government consumption deflator (1.7%, compared to the decrease of 0.9% in the first quarter) and by the sharp drop in the import deflator (-4.2 %, compared to -2.6% in the previous quarter).

The rate of job creation equivalent to full-time moderated in the second quarter of the year, three tenths in both quarter-on-quarter and year-on-year terms, to 0.6% and 2.9%, respectively. It represents the net creation of 101,200 full-time equivalent jobs in the quarter and 484,300 in the last twelve months. As a consequence of the evolution of GDP and employment, productivity per employee intensifies the year-on-year rate of growth by three tenths, to 0.4%. On the other hand, the remuneration per employee increases by 0.8%, after the decrease of 0.1% in the previous quarter, so that unit labor costs increased by 0.4%, compared to the decrease of 0.2% from the previous quarter.

Nominal GDP accelerated three tenths in the second quarter, to record a year-on-year rate of 3.7%. Regarding the primary distribution of income, this acceleration is due to the evolution of two of its three main components: the remuneration of employees grew 4% year-on-year, 0.6 points more than in the previous quarter, and the gross surplus of Holding / mixed income accelerated one and a half points, posting growth of 4.6%. For their part, net subsidy taxes on production and imports registered a negative interannual rate (-1%), after four years of consecutive progress.

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