GDP rises 0.2% in the first quarter, one tenth less than expected, due to the slowdown in consumption

Household spending registers its first quarterly decline in a year, while year-on-year GDP accelerates its advance to 6.3%

The Spanish economy slowed its quarterly growth two points between January and March, to 0.2%, one tenth less than expected, due to the slowdown experienced by household consumption, according to National Accounts data published this Friday by the National Statistics Institute (INE).

In contrast, the year-on-year growth of GDP accelerated eight tenths in the first quarter, from 5.5% in the last quarter of 2021 to 6.3%. However, this rate is one tenth lower than that advanced by Statistics in April.

The acceleration in year-on-year GDP growth is due to the greater contribution from the foreign sector and, to a lesser extent, from domestic demand. Specifically, external demand contributed 2.3 points to year-on-year GDP in the first quarter, a figure five tenths higher than that of the previous quarter and its highest contribution in nine years, while national demand contributed 4 points, two tenths more.

Statistics explained that the advance data for the first quarter was made based on statistical indicators that offered results up to February (the war in Ukraine began almost at the end of that month), while the results published this Friday already cover "in the immense most cases", the quarter as a whole.

At the end of April, the data advanced by the INE for the first quarter pointed to a quarterly GDP growth of 0.3% and an interannual rate of 6.4%, rates, in both cases, that exceeded those published by one tenth this Friday.

The agency estimates that household consumption contracted by 2% in the first quarter, compared to the 1.5% growth registered in the last quarter of 2021. It is the first negative rate of family spending since the first quarter of 2021, when it contracted 2.6%. However, this decline has moderated compared to the estimate at the end of April, when a drop in household consumption of 3.7% was anticipated, the largest since confinement.

Faced with this evolution, public spending returned to positive rates in the first quarter, although it hardly grew: only 0.1% between January and March, compared to the drop of 1.6% in the previous quarter. Spending by non-profit institutions also returned to positive rates after growing 2% between January and March after three quarters of falls.

Investment, for its part, accelerated its quarterly advance three tenths, to 3.4%, its highest rise since the third quarter of 2020, thanks to the boost from investment in machinery and capital goods (9.1%) and to a lesser extent, in housing (0.4%).

Regarding the foreign sector, exports slowed their quarterly growth to 1.1%, compared to the previous 7.2%, while imports fell by 0.8%, their first drop in a quarter since confinement.

Employment in the economy, in terms of hours worked, grew by 3.2% in the quarter, which is 3.3 points more than in the previous quarter. This rate is smaller in the case of full-time equivalent jobs (0.5%, two tenths less than in the previous quarter) due to the increase in average full-time working hours (2.6%).

YEAR-ON-YEAR GDP ACCELERATES TO 6.3%, WITH PUBLIC EXPENDITURE IN NEGATIVE

Despite the quarterly moderation in GDP, the year-on-year growth of the Spanish economy accelerated by eight tenths in the first quarter, from 5.5% in the last quarter of 2021 to 6.3%, thanks both to the greater increase in consumption by families as to investment.

Thus, household consumption accelerated its year-on-year growth seven tenths in the first quarter, to 4.9%, in contrast to public spending, which fell by 0.4%, its first year-on-year decrease since the fourth quarter of 2014 .

For its part, like family consumption, investment also stepped up the accelerator and rose by 6.8% year-on-year in the first quarter, four points more than in the previous quarter.

By economic sectors, services led year-on-year growth, with an increase in gross value added of 8.4%, followed by industry, with a rise of 0.9%, and construction (0.7%). On the other hand, agriculture registered a decrease of 2.3%.

With regard to the foreign sector, exports accelerated their year-on-year growth two tenths, to 18.1%, while imports moderated their growth rate by more than one point, from 13.1% in the fourth quarter of 2021 to 11.7% in the first quarter of this year.

At current prices, GDP for the first quarter stood at 317,928 million euros, 1,587 million euros less than in the previous quarter, but almost 30,000 million more than in the first quarter of 2021, which represents a year-on-year advance of 10, 4%, three tenths more than in the previous quarter.

With this, the implicit deflator of the economy presented a year-on-year variation of 3.9%, four tenths less than in the previous quarter.

EMPLOYMENT MODERATES ITS ANNUAL PROGRESS RATE

Employment, measured in terms of National Accounts, grew by 5.3% year-on-year in the first quarter, five tenths less than in the previous quarter, which represents an increase of 934,000 full-time equivalent jobs in one year.

In year-on-year terms, the hours actually worked rose by 7.5% in the first quarter, a rate 4.8 points higher than that of the same period in 2021.

Productivity per full-time equivalent job recorded a year-on-year increase of 1% (-0.3% in the previous quarter), its biggest advance in eight years, while apparent productivity per hour actually worked fell by 1.1 %, compared to the year-on-year increase of 2.8% in the previous quarter.

The labor cost per unit of product (CLU) fell by 0.2% year-on-year in the first quarter, a rate 4.1 points lower than the variation experienced by the implicit deflator of the economy (3.9%).

For its part, the remuneration of employees increased by 7% year-on-year in the first quarter, 1.2 points more than in the previous quarter, after increasing the number of employees by 6.2%, four tenths more, and raising the average compensation per employee by 0.8%, compared to the stagnation experienced in the fourth quarter of 2021. At the same time, the gross operating surplus grew by 12% year-on-year, 2.7 points less than in the previous quarter.