Spanish Industrial Output Falls Least in 16 Months

By Emma Ross-Thomas

Jan. 8 (Bloomberg) -- Spain’s industrial production fell the least in 16 months in November and less than economists forecast, as government stimulus measures increased demand for cars and the global recovery supported exports.

Output at factories, refineries and mines fell 5.7 percent from a year earlier, adjusted for the number of working days, the least since July 2008, after slipping 9.2 percent the previous month, the Madrid-based National Statistics Institute said today in an e-mailed statement. Economists had forecast a decline of 7.5 percent, according to a Bloomberg News survey.

Faced with the worst recession in six decades and the highest unemployment rate in the euro region, Spain created stimulus measures last year to encourage car purchases and fund public infrastructure projects. As the global economy emerges from recession, Madrid-based Acerinox SA, the world’s biggest stainless-steel maker, returned to profit last year and expects demand to climb as much as 10 percent in 2010.

“The government stimulus measures are fundamental to this data,” said Jose Luis Martinez, a strategist for Spain at Citigroup in Madrid. He said the economy may have returned to low quarterly growth in the last three months of 2009.

“Once the measures run out, we’ll have to see if this is maintained,” he said.

Car Incentives

New car registrations, a proxy for sales, rose 25 percent from a year earlier in December, according to the Madrid-based automobile group ANFAC. As part of the Socialist government’s stimulus program, the central government provides as much as 500 euros ($716) in incentives for car purchases which regional administrations can match. Automakers were asked to offer a 1,000-euro discount to top up those measures.

Vehicle production rose 17.5 percent in November from a year earlier in unadjusted terms, the report showed. Output of non-durable consumer goods rose 1.3 percent, adjusting for the number of days worked, the institute said.

Output from the metal industry, including iron and steel, increased 12.2 percent in unadjusted terms, today’s report showed. Acerinox said Oct. 28 that improved demand may allow for price increases this year.

Spain, which has been in recession since the second quarter of 2008, is lagging behind the recovery in Europe. The International Monetary Fund forecasts Spain will contract 0.7 percent this year, while the U.S., the U.K., and the euro area return to growth.

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