by Claus Vistesen
This is really just a small pointer relative to what I have already said in my two recent comprehensive notes on the Q3 GDP numbers as well as outlook from and on the Eurozone. In this way, Spain published a more detailed break-down of the Q3 GDP numbers today. Quite as expected and as I noted it is in particular the construction sector which is beginning to trend down as well as Spanish consumers are winding down what has otherwise been a very steady propensity to spend. From Bloomberg ...
Consumption growth in Spain dropped to its slowest pace in four years in the third quarter as higher borrowing costs cooled property price gains and hiring eased. Household spending grew 2.9 percent from a year earlier, after a 3.3 percent increase the second quarter, the National Statistics Institute in Madrid said in a statement today. The economy grew 0.7 percent in the third quarter from the prior three months, when it expanded 0.9 percent. That matched the initial estimate published Nov. 13. Unemployment rose in the third quarter and hiring slowed as homebuilders cut back on new projects. Growth is set to slow across the rest of the euro region next year as the euro's rise to a record against the dollar curbs exports.
``It really is the beginning of the end of the Spanish boom,'' said Dominic Bryant, an economist at BNP Paribas in London. ``Spanish housing investment will fall by about 20 percent over the next few years, meaning the economy will grow well below trend, which is about 3 percent, next year.''
Meanwhile, news and analysis has also been trickling in on Italy as Edward summarizes in a recent note over at Bonobo Land. The first thing of note is of course that consumer confidence actually rose this month but contrary to what you might expect the high figure recorded springs from the fact that consumers are looking forward to save more. This of course does suggest that relative to actual spending we should not get our hopes up; as Edward notes ...
One surprising detail in this months report is, however, that consumers are saying that they are more likely to save their money than spend it in the near future (as Pillonca imagined they would), possibly becuase they are anticipating that a significant economic slowdown is now close in Italy.
And if you don't know who Pillonca is I can understand since Edward is referring back to his mentioning of a recent analysis posted by Morgan Stanley on the Italian economy (authored by Vladimir Pillonca). In essence, Pillonca is tuning in to, as me and Edward, the fact that Italy might very well see a hefty slowdown as we move forward. The main thrust is this and I cannot but agree;
The Italian – and global – growth outlook seems to be darkening every day, despite the expected bounce-back of growth in the third quarter. We forecast Italian growth to slow sharply next year, to just 1.2%Y, from 1.8%Y this year, and we don’t anticipate a recovery to gather traction until the second half of next year. Risks are skewed to the downside. The possibility of a growth recession next year – defined as two or more quarters of negative quarter-on-quarter growth – is not a remote one.