Spanish official industrial output rises for fourth month

5th August 2010, Comments 0 comments

Spanish industrial production rose in June for the fourth month running, official data showed on Thursday, in a sign that the recovery in Europe's fifth-biggest economy is gaining pace.

Output at factories, refineries and mines increased 3.0 percent from the level 12 months earlier, adjusted for the number of working days, after climbing a by revised 3.2 percent in May, the national statistics institute said in a statement.

It rose by 2.4 percent in April and by 5.4 percent in March, when it posted its first increase since April 2008.

Spain inched out of recession during the first quarter when it expanded by 0.1 percent from the previous quarter and Prime Minister Jose Luis Rodriguez Zapatero predicted last month that growth picked up in the second quarter.

But many analysts warn that Spain could slip back into technical recession during the second half of the year due to poor consumer confidence, the end to some government stimulus measures and a rise in the sales tax to 18 percent from 16 percent as of July 1.

Raj Badiani, an economist at IHS-Global Insight in London, said June's industrial production figure "was still a poor outcome given industrial output had fallen by 16 percent in June 2009, and suggests the sector is struggling to regain its pre-crisis levels."

"The fiscal stance is set to become increasingly tighter, implying that the economy will have to fend for itself. Apart from exports, I can't see where private sector growth will come from."

In May the government squeezed through a 15-billion-euro (18.5-billion-dollar) austerity plan that aims to shore up Spain's public finances amid investor concerns it could follow Greece into a debt crisis.

The cuts, which included public sector pay cuts, were on top of a 50-billion-euro austerity package introduced in January.

© 2010 AFP

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