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?

Thursday, April 02, 2009

Spain's Unemployment Continues Its Sharp Upward Surge

The number of unemployed in Spain was up again in March - by "only" 123,543. I say "only" since it is evidently less than the 154,508 increase registered in February, or the 198,538 registered in January. And indeed many of the newspaper stories have been full of arguments from Employment Minister Maravillas Rojo (would that she could work "Maravillas") about how Spain registered the weakest unemployment gain in six months in March (when compared to the previous month). However, as those who look into the economic analysis side of this a bit more (and who don't believe in either wonders or "miracles) point out, taking seasonal factors into account the monthly 3.55% rise in March shows a more or less steady trend, and no special sign of improvement, despite the large stimulus programme. Last March, for example, unemployment fell by 0.62%.

So when we come to look at the year on year situation (which more or less eliminates the seasonal variation) we find that the year on year rate of increase of 56.69% was the highest so far, and if we look at the chart we will see there is no sign of a softening in the curve.

So the overall jobless total rose to 3,605,402 the highest since 1996, and the 3.5 percent or 123,543 March increase was the highest number since 1996 when the current method of calculation was introduced, according to the ministry statement. This was the 12th straight monthly increase and the sixth consecutive montly rise of more than 100,000 registered unemployed in Spain.

Which brings us to the forecast. Basically we could now take two scenarios, a moderate and a worse case one. On the moderate scenario, total unemployment will now hit 4.5 million by December, and 6 million by December 2010. On the worst case scenario we will already be at 5 million by christmas, and be pushing 7 million by the end of 2010. It all depends.

In terms of unemployment rate, the latest quarterly estimate we have from the national statistics agency (INE) was 13.9 percent for the fourth quarter of 2008. However according to European Union statistics agency Eurostat, Spain's unemployment rate rose to 15.5 percent in February, the highest level in the whole 27-nation bloc. (The EU average was 7.9 percent). Spain's unemployment rate has now risen each quarter since it dipped to 7.95 percent in the second quarter of 2007, its lowest level since 1978. The government currently expects unemployment to rise to 15.9 percent by the end of the year, but this is obviously hopelessly unrealistic, since we are nearly at that level now, and even the European Commission, which is normally fairly conservative with downside estimates, is more pessimistic, since it forecasts Spain's jobless rate continuing to rise in Spain to 16.1 percent in 2010 and 18.7 percent in 2011.

My own forcasts would be on the moderate forecast around 20% by the end of 2009 and 25% by end 2010, and on the worst case scenario possibly 22% by the end of this year, and 27% to 30% by the end of 2010. These latter numbers look horrific, and seem hard to believe, but we are currently set on a path (especially now with the "breakages" in the banking system - today there is growing and informed specultion here in Catalonia that Caixa Penedes, and Caixa Catalunya may be the next to go) where it is hard to see how we won't get to that horrible place if no one does anything. And since at this moment the entire European leadership seems to be in denial that there is any special problem in Spain nothing looks likely to be done. (Jean Claude Trichet simply said what he had to to the Spanish journalist who questioned him on the Spanish banking system in yesterdays press conference - "I have every confidence in the strength of the Spanish banking system). Even that G20 meeting that is hitting the headlines seems to have had little to offer for countries like Spain, there were plenty of ideas about how to avoid falling into another bubble situation in - say - 2020, but virtually none about how to drag us out of the one we are currently stuck in.

Consumer Confidence Rebounds Slightly

Due you believe in the "earthquake" theory of probability? You know, the one which goes that if you didn't have an earthquake yesterday, and you didn't have an earthquake today, then the probability of having one today must be higher, right? Well something like this seems to be the theory of probability that Spanish consumers inherently believe in.

Why? Because Spanish consumer confidence rose again this month, to 53.7 points, up from 48.6 points in February, The Confidence Index which is provided by Spain's Official Credit Institute (ICO ) was at 73.1 in March last year, hit a record low of 46.3 in July as oil prices soared and European Central Bank interest rates hit 4.25 percent, and has since oscillated around the 50 point level amid easing commodity prices and following ECB decisions to sharply reduce interets rates.

But if we look at the breakdown in the individual components, we will see that the current conditions, employment and state of the country readings have long been trawling the bottom. The only component which gas really not hit lows (yet) is the expectations one. The Spanish are ever optimistic (until they get really pessimistic that is) and this component has been rising in recent months, even as conditions have continued to deteriorate. Which is why I say they must believe something like the "earthquake" theory of probability, the more days that pass with things getting worse must mean that tomorrow they are likely to get better, right?

Industrial Contraction Continues Unabated

The JPMorgan Global Manufacturing PMI – which provides a single figure snapshot of operating conditions across the planet – was out earlier this week and posted 37.2 in March. Although substantially below the no-change mark of 50.0, the PMI was up for the third month in row and at its highest level since last October. The vast majority of the national manufacturing PMIs rose in March, including the US, Russia, Japan, China, most Eurozone nations and the UK.

This is however the most sustained period of contraction in the series history, and it still remains very unclear where we go from here. In general the drop in output reflects weak demand, with new orders declining for the twelfth month in a row. The trouble is, it is not at all clear where the rebound in demand that is needed for a recovery is actually going to come from.

The Markit Eurozone Final Manufacturing PMI for March rose from February's all-time low, up to 33.9 from 33.5. Thus the PMI signalled a marginal easing in the rate of decline from the previous month's record pace. Output showed the weakest decline for five months, and a smaller fall than the Flash estimate, although the rate of decline remained well above that seen prior to last October. With the exception of Italy, Austria and Greece, rates of contraction eased in each of the eight countries surveyed.

The Netherlands saw the smallest (though still steep) drop in production, while Spain saw the sharpest decline for the eleventh straight month. By product, investment goods producers reported the steepest fall in production for the third successive month, closely followed by intermediate goods producers. Consumer goods firms meanwhile reported the weakest rate of decline for the seventh consecutive month. Stocks of both raw materials and finished goods fell at record rates, as companies focused on lowering their operating capacity and controlling costs. The reduction in unsold goods stock was especially steep in Ireland, Germany and France.


The pace of decline in Spanish manufacturing slowed in March but remained at the steepest contraction rate of any eurozone country. The PMI rose in March to 32.9 from 31.8 in February and thus further off from December's record low of 28.5. All the survey's main indicators remain far below the 50 level that divides growth from contraction. Output and new orders continued to contract sharply in March but at slower rates than recorded in the last six months, with panellists blaming falling demand as the principal cause as clients cut back on spending.

"The March PMI data suggests that the pace of decline in the Spanish manufacturing sector has slowed," said economist Andrew Harker at Markit Economics, adding that new orders and output indices are well above record lows posted late last year.

But Harker was at pains to stress that the March figures should not be interpreted as any sort of sign of a turnaround in the Spanish economy. Unemployment in the sector continued to rise in line with falling output requirements as joblessness in the wider Spanish economy stood at 15 percent, the highest rate in the European Union. More than 34 percent of those surveyed by Markit said they had noted reduced employment levels at the end of the first quarter. Staffing levels have shrunken continuously since September 2007, according to the survey.

Slumping demand also hit input and output costs, which both dropped to series lows in March. Input costs fell as firms negotiated better prices from suppliers, while output prices fell as these savings were passed on to customers and as scarce business fuelled greater pricing competition.

Spain's preliminary harmonised inflation fell to -0.1 percent in March, according to government data on Monday, the first negative result for over 45 years as the deepening recession weighed on price gains.


markinspain said...

Hi Edward,

As an expat living in Spain who enjoys reading your blog, Im a bit concerned about your comments about Caixa Catalunya as I have a faily large amount deposited with them at the moment. Should I get it out asap



Edward Hugh said...

Hello Mark,

"as I have a faily large amount deposited with them at the moment. Should I get it out asap"

Basically, no, not at all. In the first place I am only repeating information freely available in the Spanish press at the moment, and have made no special analysis. Caixa de Catalunya (not, please note La Caixa) had the highest rate of non prerforming loans (5.8%) in Q4 2008, and they are all going steadilñy up at the moment. But this is why attention has focused on them.

Deposits up to 100,000 euros are guaranteed, so they are in no danger as long as the Spanish state has the financial capacity to honour these guarantees. At the present time it does, so my *personal* opinion is that you should have no worries.

Obviously things can change in the future. The day you switch on the telly and see that a medium size bank (say Sabadell) has been "intervened" then you need to start to think and draw your own conclusions. You need to follow carefully the financing capacity of the Spanish state, and the willingness of France and Germany to bail Spain out. Again I can only provide information and analysis. The conclusions you draw have to be yours and your alone.

Good luck,


markinspain said...

Hi Edward,

Thanks for the reply. I suppose they are all in trouble one way or the other, and it's just a case of who ends up in the newspapers! If I moved it, it could be a case of out of the frying pan into the fire.

I think most of the world is worried about their assets at the moment whether in fiat currency or not. Perhaps I should just stock up on guns and beans haha!

As you say, I'll have to keep my eye on the Spanish press (I do speak Spanish) although at the end of the day, you are only ever going to hear what the government want you to hear.

One final question. Do you think the Spanish family structure will enable the population to withstand the downturn better than say the more individualistic UK?



P.S. faily should have been fairly in the last message but there is no edit facility. I'm sure you realised.

Anonymous said...

I was in Ikea on a Friday night and as usual it was packed, which really surprised me considering how bad the ecomony, it wasn't till I got to the checkout till that I realized everyone was only shopping, a busy Friday night,not many tills open and yet we had to wait only a few moments to get through!!!

Rob in Madrid

Anonymous said...

opps, that should read window shopping.

Hynek Filip said...

To Markinspain:

Get the money out, now. Keep cash (euros, dollars, francs, korunas, whatever you can think of, but diversified), gold and stocks and skip banks.

You know, I have been through a banking system collapse back in 1997-9. I know perfectly well how it works.

It is brutal, ruthless and by no means politically correct: whoever comes in time to get the money back, wins.

Edward believes in the Spanish state. Well, the Spanish government may pay you back, but nobody knows, when. When will it pay? Tomorrow? Will you bet a hundred thousand on that? If not, go and pull out everything tomorrow, Monday 6 April, 2009.

Anonymous said...

HI Hynek,
could you breifly expalin what did happen in the banking crisis you experience? something in the news triggered run on the banks until they were depleted? How long it took to the banks be left with no cash? And then what? Could people not get their money back? if so, how long it took?
I could not easily find an article about this on the web

markinspain said...

Hi Hynek,

You paint a pretty grim picture from your experiences. Can you say where it was and what exactly happened? I have seen the youtube videos about Argentina but that was the early 2000s.

There is a big problem about holding lots of cash in Spain; principly the crime rate. (Some Spanish friends recently had their car stolen from outside their house!). I wouldn't want to risk having large amounts of cash in my house. Where do you suggest I put it?


Edward Hugh said...

Hi Hynek,

I think I want to be clear here.

"Edward believes in the Spanish state."

I don't believe in the Spanish state, or any other state (or anything, if it comes to that, except that I am here, and am the one writing this, although even the reading too much of either Bishop Berkeley or Jaques Derrida could lead me to doubt even that). What I accept at the present time is the credibility of the guarantee offered by the Spanish State on deposits. Moving money around at this point seems (unless you have something useful to invest it in) to be entirely foolish, and a complete waste of time.

I don't think something like gold offeres any sort of guarantee at all, by the way, since gold could be hopelessly over valued (I have no idea).

Neither do I have any idea whether the next move is dollar up, or dollar down, or yen up, or yen down. I am not a currency trader, and I suggest people who do not know much about the topic do not try to become one either.

Basically, for the Spanish guarantee to become invalid, the whole eurosystem would need to be near to collapse. We are far from that point at this stage, and a lot of negative things would all have to happen for that disaster to be realised.

But as we can all see from what is happening around us, total disasters cannot be completely exclused these days. So I think it is advisable to have a hedge.

As I say, my own personal advice to friends is to do what they did in the old Franco days, and keep a small "just in case" account open in France.

The French economy and banking system seem to me to be the most stable in the EU at this point (at least of the large economies), and more so than the German one, which has more losses in the US, Spain and Eastern Europe to swallow, and has larger age related liabilities just around the corner.

So if the euro does fall apart, my view is that the French Franc would be stronger than the German mark.

Also, logistically France is more convenient.

Anyway, I want to reiterate that I hope we never get through to the point that this advice will be of any use at all. Having said that, the key points to watch will be what happens when a mid size bank needs intervention, and how France and Germany react.

And now I would prefer not to have this conversation too many more times, since I do not want to be accused of starting bank runs :)

Hynek Filip said...

"Moving money around at this point seems (unless you have something useful to invest it in) to be entirely foolish, and a complete waste of time."

Not to be misunderstood: I am not much in favor of moving money around, either.

Diversifying would be a completely different story. After a few lessons learned (and money moved around), I always keep cash in three different banks and a decent working reserve of paper money in the safe.

And of course, a little bit of gold. It looks nice and if all goes fine and gold goes down, well at least the kids will have something to play with :)

But Edward does know how to hit a nail right on the head: "unless you have something useful to invest it in".

Yes, that is the right answer to anybody troubled by too large bank deposits. Think hard, find investment opportunities and invest. In fact, there are more opportunities these days than maybe ever since WWII. Paper money does not get anybody anywhere, but a bit of good reasonable investment helps both the investor and the economy.

Roberto Naricha said...

I am not a financial adviser and you should not treat anything I say as a recommendation. Having thus covered my back legally, I can say that I am an economics journalist of nearly 25 years’ pedigree and a businessman of more than 15. I also write about the global private equity and venture capital industries. One thing that we have noticed this year is that there is renewed interest among institutional investors in European venture capital plays, focused largely on technology companies and with life sciences (biotech, medical technology, healthcare IT etc), IT, and cleantech among sectors that are finding favour. The reasons are not hard to understand. The internal rate of return on European VC investments has recently been better – or to be more accurate, less worse – than private equity returns. Also, VC investment does not typically involve debt which investors are finding hard to raise. So it is a good vehicle through which to put equity to work. Furthermore, the pattern of returns from investing in technology tends to favour buying in a trough because valuations are depressed but often ramp up quickly in a recovery. Signs are that sellers' denial and grief over valuations have given way to reality and that companies are selling at attractive multiples from purchasers’ perspectives. One way for ordinary investors to buy into this story may be through listed VC and private equity players such as GIMV, the Belgium fund that is listed on Euronext. Good sources of information and insight include,,,,, and others.

Anonymous said...


(forgive my english and lack of clarity, as I dont have much time)

I am a professional investor. I have run foreign exchange, interest rates, and equity portfolios, both in cash securities and derivatives on these assets. I am also very familiar with a number of alternative investments, including private equity and venture capital.

And no, I am not looking for a job. As I read Edward regularly, I wanted to contribute with a view. For what it is worth. Investments is my area of expertise.

Now, I follow the Spanish economy and financial system quite closely as I am now focused in the country as an investor. I follow the banking developments and I am familiar with their financial statements. As I have traded interest rates I am also familiar with central bank dynamics (not sure very useful nowadays, we are in unchartered territories), but at least I think I can put the country situation somehow in context.

I am afraid that experience does not give me, or anybody, a perfect, or even good, hindsight of what is going on. The situation is far too complicated. The policy actions are very agressive and the consequences mostly unpredictable. There is a very high degree of uncertainty, much higher than normal, needless to say.

But to the point, besides trying to forecast what is going to happen, there are some pitfalls that, in my opinion, one can avoid. I am not going to discuss anything in detail, but I guess the most obvious, at least in my opinion, is the tendency of focusing on the tail risk, analyzing how bad things could get and then make decisions looking only at that side of the distribution.

it is very important to have a view of how bad things can go. One should not look only at the average, or the most likely outcome, as this is usually a very lousy tool for making decisions. At the same time, black swans are rare events, there are very interesting if you have intellectual curiosity, or if you are a researcher or if are a journalist or an analyst, but still, they are rare events. Making decisions looking only at the black swans is probably as bad as not taking them into account, or maybe even worse. Life is about taking risks, and there is no way we can be completely safe and secure, whether we like it or not.

But I am getting too way off. Let's be more practical:

1) do not worry about the safety of your deposits, even if you have much more than 100,000eur. In Spain (as in most of Europe), bank deposits rank paripassu with senior debt, currrently guaranteed by the state. The Spanish financial system is damaged, but simple calculations based on NPL are not a good measure of solvency; those are static ratios, whereas banks can actually manage their balance sheets quite dynamically, it is their main job, and central banks are helping them. There are many things that can be done to avoid the equity of a particular institution to be wiped out, the most evident, nationalization of bad assets (tax payers take the loss of some institutions). It is easy to get scared when yo see the large numbers involved, the size of the bubbles and the bodies in the road. But again, static analysis is very misleading: one thing is for a system to reduce the growth speed, even to go to negative growth, and some other thing is for the system to collapse and go to zero. The Spanish financial system is NOT in the verge of collapsing. it is NOT. Some institutions have problems, but so long as the problems emerge gradually and not everywhere at the same time, the system is going to survive. And in any case, things do not happen overnight, there is time to make decisions if we go deeper into the mud, but only if.

2) do not get to smart in investing your assets right now. cash is king. you are the king. this is the best investment advice i can imagine right now.

... i´ll continue some other time...

Anonymous said...

4 million people already unemployed (17.36%)