Bloomberg News

Spanish Industry Shrinks for Ninth Month as Recession Worsens

July 06, 2012

Spanish industrial production fell for the ninth month in May as the recession in the euro area’s fourth-largest economy worsened amid rising borrowing costs.

Output at factories, refineries and mines adjusted for the number of working days fell 6.1 percent from a year earlier, after an 8.3 percent decline in April, the National Statistics Institute in Madrid said today in an e-mailed statement. That is less than the median forecast for an 8.1 percent contraction in a Bloomberg survey of seven economists.

Spain’s recession probably intensified in the second quarter as the European sovereign debt crisis worsened, the Bank of Spain said on June 27. Acerinox SA, Spain’s largest steelmaker, is laying off workers for as many as 15 days per month at the Ponferrada plant of its Roldan SA unit.

Amper SA, which makes telecommunications equipment, said on June 29 it would lay off 220 employees.

As the government’s access to financial markets narrows, Spain is negotiating the terms of a 100 billion-euro ($125 billion) European bailout for its banks. The yield on Spain’s 10-year benchmark bond was little higher at 6.86 percent at 8:52 a.m. in Madrid, compared with a euro-era intraday high of 7.285 percent on June 18.

The government predicts domestic demand, including spending by public administrations, will shrink 3.1 percent in 2012, more than four times last year’s rate, as close to a quarter of the workforce is jobless. Exports, which the government forecast would drive the recovery, dropped in April for the first time since 2009.

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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