Spain Industrial Output Falls More Than Expected for 15th Month

By Emma Ross-Thomas

Sept. 8 (Bloomberg) -- Spain’s industrial production declined for a 15th month in July, adding to signs Spain will take longer than its European trading partners to emerge from the recession.

Output at factories, refineries and mines fell 17.4 percent from a year earlier, adjusting for the number of working days, after declining a revised 16 percent in June, the Madrid-based National Statistics Institute said today in an e-mailed statement. That compares with a median forecast for a 16 percent drop in a Bloomberg News survey of nine economists.

Spain’s economy contracted for a fifth quarter in the three months through June even as Germany and France returned to growth. After the collapse of the construction boom pushed Spanish unemployment to 18.5 percent, the highest in Europe, the nation’s gross domestic product may shrink 0.9 percent in 2010, the Organization for Economic Cooperation and Development said on June 24, making it the worst performer in the 30-nation OECD after Hungary and Ireland.

“In the third quarter, it will probably still be negative quarter-on-quarter, but by the end of this year or the beginning of next year the sector will begin to expand again,” said Dominic Bryant, economist at BNP Paribas in London, referring to Spanish industrial output.

Vehicle manufacturing declined 31 percent from a year earlier, in unadjusted terms, today’s report showed. New car registrations, a proxy for sales, stagnated from a year earlier in August, compared with annual declines of more than 40 percent in January and February, after government incentives for consumers started in May.

Ford Motor Co. said on July 31 that it plans to eliminate 600 jobs in Spain. Nicolas Correa SA, Spain’s largest milling- machines maker, has cut its workforce by 15 percent, and anticipates a total reduction of 20 percent by year end, the company said on Aug. 31. The number of unemployed industrial workers increased 47 percent from a year earlier in August, the Labor Ministry said last week.

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