Spanish Industrial Production Contracts for Third Month in July

By Emma Ross-Thomas and Ben Sills

Sept. 5 (Bloomberg) -- Spanish industrial production contracted for a third month in July as a strong euro made exports less competitive and demand at home weakened.

Production at factories, refineries and mines, which accounts for a seventh of the Spanish economy, fell 4.4 percent from a year earlier after adjusting for the number of days worked, the Madrid-based National Statistics Institute said in an e-mailed statement today.

That followed a revised 9.2 percent drop in June, the sharpest fall since a 1993 recession, and compared with a median forecast of a 6.5 percent decline by 10 economists in a Bloomberg News survey.

``We saw the declines in consumption moderating in July after some sharp falls,'' Jose Luis Martinez, a strategist at Citigroup Inc. in Madrid, said before the release. For industrial production ``the trend has been very bad.''

Spain's economy, which outpaced the euro-region for more than a decade, expanded at the lowest pace in 15 years in the second quarter as a housing market collapse destroyed jobs and undermined investment. Economists see a 67.5 percent chance of Spain entering a recession by the end of next year, a Bloomberg survey showed.

Production of consumer durable goods fell 14 percent from a year earlier and output in the mining industry fell 12 percent, today's data showed.

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net