Monthly summary of the state of the Spanish and international economy

1. Source: Círculo de Empresarios based on Ministry of Labour, 2019
Source: Círculo de Empresarios based on Markit & CIS, 2019
1 A value of >50 indicates expansion and <50 is contraction
2 A CCI value of >100 indicates a positive perception and <100 is negative
perception
Growth forecast, European Commission
YoY change (%)
Source: Círculo de Empresarios based on European Commission, 2019
1.1 1.2
1.2
1.4
0
1
2
3
2019 2020
Autumn Forecast Summer Forecast
1.9
1.5
2.3
1.9
2019 2020
Eurozone Spain
2,0
2,5
3,0
3,5
4,0
-12
-9
-6
-3
0
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Unemployment (left axis)
Social Security affiliates (right axis)
46.8
52.7
73.3
20
40
60
80
100
40
50
60
70
Manufacturing PMI (left axis)
Services PMI (left axis)
CCI (right axis)
GDP, Spain
The European Commission has reduced the
previous growth forecasts of the Spanish
economy from 2.3% to 1.9% in 2019 and from
1.9% to 1.5% in 2020. The downwardly
revised new forecasts are mainly explained
by the revision of the historical series of the
Spanish National Statistics Institute (INE)
and the moderation of the private
consumption in the wake of the national and
international political uncertainty.
Likewise, the difference in the GDP growth
between Spain and the Eurozone is reduced,
from 1.1 pp to 0.8 pp in 2019.
The labour market, Spain
In October, registered unemployment in the
Social Security increased by 97,948 people
(3.2% month-on-month), reaching a total of
3,163,566 people, and subduing the rate of
correction of unemployment to 2.4% year-
on-year, compared with 8% average
between 2016 and 2018.
Whereas, the number of affiliates increased
by 106,542 people (0.6% month-on-month),
slowing down job creation to 2.3% year-on-
year, which is 1pp below the average for the
period between 2016 and 2018 (3.3%).
Economic sentiment, Spain
In October, the leading economic indicators
confirm the slowdown in Spanish GDP,
mainly explained by the political
uncertainty, the fragility of the industrial
sector, and the lower dynamism of the
labour market.
• The manufacturing PMI1
has dropped by
0.9 points to 46.8 points, remaining for the
fifth consecutive month in the contraction
phase, as a result of dwindling production
and fewer new orders.
• The services PMI1
has dropped to 52.7
points, remaining in the expansion phase,
as the sales prices were slashed in order to
maintain the demand for new orders.
• The Consumer Confidence Index2
has
dropped by 7.4 points to 73.3 points, a
record low since December 2013 (71
points).
Economy…
at a glance November 2019
Social Security affiliates and unemployment, Spain
YoY change (%)
Economic indicators evolution, Spain
Points

2. ‘Economy 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
Source: Círculo de Empresarios based on Thomson Reuters, 2019
1 Economic sentiment of Zentrum für Europäische
Wirtschaftsforschung (ZEW): a value above 0 indicates investor
optimism and below 0 indicates pessimism
Source: Círculo de Empresarios based on Bureau of Labor Statistics, 2019
Source: Círculo de Empresarios based on IMF, 2019
-50
-25
0
25
50
75
100
45
50
55
60
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Composite PMI (left axis)
Manufacturing PMI (left axis)
ZEW (right axis)
0
50
100
150
200
250
300
350
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Employment growth MA 12 months
-7,0
-6,0
-5,0
-4,0
-3,0
-2,0
-1,0
0,0
46
48
50
52
54
56
58
60
62
2015 2016 2017 2018 2019
Public debt (left axis)
Public balance (right axis)
Economic sentiment, Eurozone
In Q3 2019, the GDP of the Eurozone grew
by 1.1% year-on-year, which is 0.8pp lower
than in 2018 as a whole, in an environment
marked by a fragile industrial sector and a
weak external sector, especially in
Germany.
Among the main economies of this monetary
union, Spain and France have maintained
their growth rate at 2% and 1.3% year-on-
year, respectively, while Italy has continued
in a stagnation phase (0.3% year-on-year).
In this context, the latest leading economic
indicators of October confirm the moderate
growth rate:
• The composite PMI, despite a slight increase
of 0.5 points to 50.6 points, remains at the
record lowsof 2013.
• The manufacturing PMI continues in the
contractionphasewith45.9 points,itsrecord
low since2012.
• The Eurozone Economic Sentiment Index
(ESI) fell to 100.8 points (vs 101.7 in
September).
• The ZEW1
index, which measures the
economic sentiment of investors in the
Eurozone, dropped by 1.1 points to -23.5
points,remainsinthecontractionphasesince
June2018.
The labour market, USA
In October, the US unemployment rate
slightly rose to 3.6%, although it continues
at record lows of 1969.
Since January, the pace of job creation has
moderated in an environment in which
wages rise above inflation (2%), and
business operating margins are reduced.
Specifically, the nonfarm payroll
employment increased by 128,000 people,
27% lower than the average of the last 12
months (174,400 jobs/month).
The slowdown in the labour market is
mainly concentrated in the industrial sector,
where 36,000 jobs were destroyed compared
to the average monthly creation of 22,000
jobs in 2018. In contrast, the services sector
showed a similar evolution to the previous
year with an increase of 157,000 employed
people in October (average of 2018 was
163,000 jobs/month).
South Africa
Moody’s has revised down the South
African debt rating from Baa2 (stable) to
Baa3 (negative), placing it one grade above
junk bond ratings. The causes of this
downgrade are mainly the failure of the
Government in the design of its economic
policy, the lower growth prospects (0.7%
per year in 2019), and the deterioration of its
budgetary situation. Specifically, the public
deficit is expected to increase to 6.2% of
2019 GDP, compared with 4.4% in 2018, and
that the public debt reaches 59.9% of GDP
(vs 56.7% in 2018).
Employment monthly growth, US
Thousands of jobs
Economic indicators evolution, Eurozone
Points
Budgetary situation, South Africa
% of GDP