The rate of decline in Spain's manufacturing sector eased back a bit in August from June, breaking a six-month run of ever deteriorating readings, but this should be little comfort, since the rate of decline was still the third strongest since the seasonally adjusted time series started, and of course, August is mainly a holiday month in Spanish factories, so you can make what you want of the whole issue really. Meanwhile car sales dropped at their most rapid year on year rate yet in August, which doesn't bode too well for autumn activity for Spain's car factories, many of whom are already working short time.
The Markit Economics Purchasing Managers Index for Spain came in at 42.4 points, up from July's low of 39.2, but still well below the 50.0 cut-off point which marks the frontier between contraction and expansion.
The Markit Research survey revealed that operating conditions deteriorated markedly in the Spanish manufacturing sector in August as output, new orders and employment all continued to contract.
Car Sales Slump In August
Spain recorded the biggest drop this year in car sales in August, and they fell 41.3 percent to 58,530 vehicles, the fourth straight month of decline, according to results from the Spanish industry group Anfac. Sales for the first eight months of the year came to 882,397 vehicles, down 21.1 percent on the same period in 2007.
Colonial Declares 2.8 Billion Euro Loss
Troubled Spanish Real estate firm Colonial reported a 2.38 billion euro ($3.51 billion) loss in the first half of 2008, after taking charges for plunging asset values. Colonial recorded the loss, which compared to a 316 million euro profit a year earlier, after 2.58 billion euros in writedowns for the falling value of real estate holdings and its 15 percent stake in Spanish building firm FCC.
The firm also said in a statment issued late yesterday thatit had reached a preliminary deal with creditor banks to restructure its debt and hoped to reach a final accord in early September. In the statement Colonial declared that its debts totalled 8.99 billion euros as of June, while its assets were worth 10.5 billion euros at the same point in time. Since ongoing interest payments (plus risk premiums) mean that the former is set to rise, while the deteriorating property market will mean that the latter are set to fall, it seems to me that it won't be long before they are completely under water.
Spain Real Time Data Charts
Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Spain related comment. He also maintains a collection of constantly updated Spain charts with short updates on a Storify dedicated page Spain's Economic Recovery - Glass Half Full or Glass Half Empty?