Spanish Consumers Drive Recovery as Jobs Spur Momentum

Bloomberg - 24.08.2017

Consumers helped propel the Spanish economy in the second quarter as the Iberian nation extends a three-year recovery that’s leaving euro-area peers in its wake.

Household expenditure almost doubled to 0.7 percent in the three months to June on the back of strong job creation, which accelerated to 0.9 percent, the National Statistics Office said Thursday. The Spanish economy has added 480,000 new full-time posts over the past year, although the number of hours worked has fallen slightly.

Total output grew 0.9 percent in the second quarter, the Madrid-based stats office said, confirming its initial estimate percent published last month. Investment -- particularly in machinery and equipment -- was the second-largest contributor to internal demand.

Speaking after the data were released, Economy Minister Luis de Guindos said the current government forecast predicting growth of 3 percent now seems “too prudent” and will be revised upward when the budget plan for 2018 is presented before lawmakers. The Bank of Spain and the International Monetary Fund forecast growth of 3.1 percent this year.

As households gain traction, the surge in exports and tourism is also powering Spain’s expansion, boosting employment. Exports rose 10 percent in the first half to a record 141 billion euros ($130 billion), while tourist arrivals increased 12 percent over the same period.

Prime Minister Mariano Rajoy, who leads a minority government, is pushing for political alliances to get his spending bill for next year approved when parliament reconvenes in September.

— With assistance by Kristian Siedenburg, Harumi Ichikura, Catherine Bosley, and Rodrigo Orihuela

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