• Household consumption maintains a rhythm of 0.5% and registers positive rates for the third consecutive quarter
  • Investment in capital goods registers four quarters in positive and reaches 2.2% in annual average
  • Employment in national accounting terms increases 0.1%, which has not occurred since the first quarter of 2008

The Spanish economy registered a quarter-on-quarter advance of 0.2% in the fourth quarter of 2013, one tenth higher than in the third quarter. In year-on-year terms, GDP decreased by 0.2%, almost one point less than in the previous quarter. The year as a whole closed with an average annual decline of 1.2%, one tenth less than the Government forecast and four tenths less than that registered in 2012. Growth in consumption, investment in capital goods and the Increased employment drives the new stage of recovery of the economy.

Net external demand continued its positive evolution, although it cut its contribution to the year-on-year growth of the product by six tenths, to stand at 0.4 percentage points. In contrast, national demand exhibited less contractionary behavior, subtracting 0.6 points from growth, one and a half points less than in the previous quarter.

The lower contribution of net external demand to year-on-year GDP growth was due to an acceleration in imports, much higher than in exports. Thus, imports increased by 2.7%, 2.1 points more than in the third quarter, while exports advanced by 3.7%, two tenths more than in the July-September period.

In quarter-on-quarter terms, exports accelerated two tenths in the fourth quarter, to 0.8%, due to the greater dynamism of service exports (2.3% compared to 0.3% in the third quarter) and, in particular , of non-tourist services, since the expenditure of non-residents in Spain fell 1.5% after two quarters of consecutive advances (3.5% in the third). On the other hand, exports of goods decelerated six tenths, reaching a quarterly rate of 0.2%. Imports decreased 0.6% compared to the previous quarter, after growing 2.1% in the third quarter, a fall attributable to imports of goods (-1.2% compared to 4.2% in the previous quarter). Those of services grew by 2.1%, after the fall of 5.5% in the third quarter, due to the increase in non-tourist services, while the spending of residents in the rest of the world decreased by 0.2%, compared to the 6.5% increase in the previous quarter.

In a more detailed analysis of the evolution of national demand, household final consumption expenditure stabilized its quarter-on-quarter growth rate at 0.5% from October to December. For its part, the final consumption expenditure of the Public Administrations fell by 3.9%, after increasing 0.6% in the previous quarter. Gross fixed capital formation posted a quarter-on-quarter increase of 0.7%, the same as the previous quarter. This stabilization was due to a moderation in the fall in investment in the construction sector, which went from -0.9% in the third quarter to -0.1% in the fourth and offset the lower dynamism of investment in equipment (1.7% vs. 2.4% in the third quarter) and of intangible fixed assets (1.5% vs. 4.6% in the previous quarter).

From the perspective of supply, the GVA of the services sector, the one with the greatest weight in GDP, grew again for the third consecutive quarter, 0.4% quarter-on-quarter, a rate identical to that of the July-September period. The GVA of the industry posted a zero variation, compared to the 0.6% increase in the third quarter, and construction moderated its quarter-on-quarter rate of decline by almost one point, to -0.4%. Agriculture, for its part, posted a positive rate of 3.3%, 4.6 points higher than the previous quarter.

The annual rate of job destruction, in terms of full-time equivalent jobs, fell more than half in the fourth quarter, to 1.6%. In quarter-on-quarter terms, employment registered a positive rate of 0.1%. As a consequence of the evolution of GDP and employment, productivity per employed person decelerated seven tenths, to 1.5%. On the other hand, compensation per employee accelerated more than two points, to 2.7%, so that unit labor costs increased by 1.2% (-1.6% in the previous quarter).

Regarding nominal variables, the GDP deflator slowed two tenths in the fourth quarter, to 0.2% year-on-year, due to the evolution of the private consumption deflator, which grew by 0.3%, one point less than in the previous quarter, as well as the biggest drop in the export deflator (-2.2% compared to -1.4% previous). The consumer spending deflator of the general government went from growing by 0.4% in the third quarter to 3.5% in the fourth and that of imports fell by 1.8%, one tenth less than in the third quarter.

In the fourth quarter of 2013, the Spanish economy presented an external financing capacity of 7,815 million euros, 1,339 million euros higher than a year earlier. In terms of GDP, this represents a financing capacity of close to 3%, higher than that of the fourth quarter of 2012 (2.5%).

The annual average growth in activity in 2013 showed a rate of -1.2%, one tenth higher than the official forecasts. The contribution of national demand was 1.4 points less negative (up to -2.7 points) and that of external demand was 1.5 points. The process of correcting imbalances continued with great force, so that the Spanish economy went from registering a need for financing of more than half a point of GDP in 2012, to a financing capacity of 1.5% of GDP. This improvement occurred in parallel with a moderation trajectory of wage costs and prices.

In short, the national accounts for the last two quarters of the year confirm the start of the recovery in economic activity. Investment in capital goods takes four quarters with positive quarter-on-quarter rates, reaching growth of 2.2% on an annual average. Private consumption, meanwhile, has been running for three consecutive quarters with positive growth rates. These positive data are also reaching employment. The last quarter of the year was the first since the beginning of the crisis in which employment grew both in terms of EPA and national accounting and Social Security affiliations, in seasonally adjusted data in all three cases. The main leading indicators and the composition of demand point to a reinforcement of these trends and to the recovery of production and employment during 2014.

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