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Business... at a glance September 2019
1. -4
-2
0
2
4
Total labour cost per worker
Total salary cost per worker
Other costs per worker
-20
-10
0
10
20
30
40
50
60
Range of estimates Average2
-3
0
3
6
9
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Eurozone
Spain
Labour cost, Spain
The rise in the minimum wage since January
2019 (22.3%) and the higher maximum
contribution bases to Social Security (7%)
are the main factors that explain the rise in
labour costs.
Specifically, in Q2 2019, the labour cost per
worker increased by 2.4% year-on-year
(2.1% in Q1 2019) to €2,664.55, the largest
spike in 10 years. Since 2017, the year in
which there is a change in trend, labour
costs record acumulative annual increase of
3.26%. By components, salary costs rose by
2.1% year-on-year (1.7% in Q1 2019) and
other costs1
by 3.4% (3.1% in Q1 2019),
underlining the spike in social contributions
(3,95%).
Real estate sector, Spain
In Q2 2019, house prices increased by 5.3%
year-on-year, 1.5pp less than in Q1 2019. This
restraint is mainly due to the slowdown in
the purchase and sale of homes (3.7% in Q1
2019 vs 7.5% in Q4 2018) given the grim
outlook for the Spanish economy and its
political instability. Since 2014, the average
house prices have increased by 4.7% year-
on-year.
Despite this trend, in Q1 2019, Spain
recorded the 5th
largest house price increase
in the Eurozone after Portugal (9.2%), the
Netherlands (8%), Slovenia (8%) and Latvia
(7%).
This evolution does not translate into an
overvaluation of the Spanish real estate
market, which the Bank of Spain estimates
to be at approximately 5%, on par with the
Eurozone. The five countries with the
highest overvaluations in house prices are
Luxembourg (30%), Austria (20%), Belgium
(13%), France (10%) and Germany (10%).
Business sector, Spain
In July, the number of companies increased
by 7,820, representing an increase of 1.6%
year-on-year, which is still 1.9pp less than in
the same period of 2018. By sectors, the
incorporation of companies occurred mainly
in retail (19.1% of the total) and the real
estate sector (17.6%). In turn, the number of
dissolved companies amounted to 1,662, an
increase of 9.2% year-on-year, mainly in
industry and energy (22.7%) and in retail
(17.8%).
Business…
at a glance September 2019
Labour cost, Spain
YoY change (%)
v
Source: Círculo de Empresarios based on INE, 2019
Source: Círculo de Empresarios based on Bank of Spain & Eurostat, 2019
1 Compulsory contributions, non-wage payments, and subsidies &
allowances
House prices evolution
YoY change (%)
v
Overvaluation of the house prices
%
v
2 Dispersion of the methodological approaches carried out by the Bank
of Spain
2. ‘Business at a glance’, a publication of the Círculo de Empresarios produced by its Department of the Economy, contains information and opinion from
reliable sources. However, the Círculo de Empresarios does not guarantee its accuracy and does not take responsibility for any errors or omissions. This
document is merely informative. As a result, the Círculo de Empresarios is not responsible for any uses that may be made of the publication. The opinions
and estimates of the Department can be modified without prior warning.
www.circulodeempresarios.org
48.7
24.9
5
4.8
16.6 US
China
United Kingdom
India
Rest
-20
-10
0
10
20
30
Aug-01
Aug-02
Aug-03
Aug-04
Aug-05
Aug-06
Aug-07
Aug-08
Aug-09
Aug-10
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Aug-16
Aug-17
Aug-18
Aug-19
US China Eurozone
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19
China 49.5 49.2 50.5 50.1 49.4 49.4 49.7 49.5
Eurozone 50.5 49.3 47.5 47.9 47.7 47.6 46.5 47
US 56.6 54.2 55.3 52.8 52.1 51.7 51.2 49.1
Industrial production
In a context of global economic slowdown
with mounting geopolitical risks (tensions
in Saudi Arabia, Iran and Hong Kong), the
industrial sector continues to show signs of
fragility not only in the Eurozone but also in
the US and China.
Eurozone
In July, the industrial production in the
Eurozone fell by 2% year-on-year for the
sixth consecutive month.
Among its main economies, Germany
reported the largest contraction (–5.3%),
5pp and 4.6pp more than in Italy and
France, respectively. As for Spain, its
industrial production rose at a moderate
0.3% year-on-year, compared with an
average of 1.3% in Q2 2019.
Among the leading indicators of the sector,
since February, the Eurozone
manufacturing PMI remains in the
contraction zone, currently standing at 47
points. This evolution confirms the
feebleness of production, demand for new
orders, and business confidence, which are
at record lows since November 2012.
US
In August, the US industrial production
rose at a moderate 0.4% year-on-year,
compared with 5.3% in the same month of
2018. Whereas, the manufacturing PMI
slipped into the contraction zone with 49.6
points for the first time since 2016.
China
In August, China's industrial production
rose by 4.4% year-on-year, its lowest rate
since 2002, well below the forecasted range
between 5.2% and 5.5%.
The Purchasing Managers' Index (PMI) of
the Chinese manufacturing sector dropped
to 49.51 points, remaining for the fourth
consecutive month in the contraction zone,
mainly due to the fall in new orders and the
shaky external demand.
“Unicorn companies”
Currently, the number of unicorn companies3
worldwide amounts to 401 companies, 54%
more than in 2018, reaching a total value of $1.2
trillion (1.4% of world GDP).
By countries, the US accounts for 48.7% of the
total, and China for 24.9%. In Europe, the
United Kingdom is the country with the most
unicorn companies, while Spain only has one.
Thesectorswiththemostunicornsare:Fintech
(11.8% of total companies), e-commerce
(11.8%), software and internet services (11.6%),
and artificial intelligence(11.1%).
Industrial output evolution
YoY change (%)
v
Manufacturing PMIs
Points
v
Source: Círculo de Empresarios based on Markit, 2019
Source: Círculo de Empresarios based on CB Insights, 2019
Note: A PMI above 50 represents an expansion and a PMI reading un-
der 50 represents a contraction
Source: Círculo de Empresarios based on Bloomberg, 2019
“Unicorn companies” by countries, 2019
% of total
v
2017 2018 2019
214 260 401
+21% +54%
3 A unicorn is a privately held startup company valued at over $1 billion.
Number of “unicorn companies”