Overall, the generally more reliable EAPS data supports the positive monthly data releases from registered unemployment and social security affiliations.
As the labour market conditions carry a significant weight in our tracking models of economic activity, and given the positive surprises, we are revising slightly upwards our GDP growth estimate for Q3 2014 from 0.3% q/q to 0.4% q/q (actually to a “high” 0.4%), still below Q2 14 when GDP grew by 0.6% q/q.
We now expect domestic demand in H2 14 to have a slightly higher contribution than we had previously projected. However, we remain cautious about the export performance of the Spanish economy as key trade partners remain very weak (including France and Italy), as recent industrial production and PMI data show. Nonetheless, we expect Spain to be the strongest growth performer within the EA4 in H2 14. Overall, our 2014 GDP forecast now stands at 1.3%, rising to 1.8% in 2015.
*The views expressed in the article are the author’s.