Spanish Industry Contracted Most in Eight Months in October

Spanish industrial production shrank in October by the most in eight months as the economy struggled to recover from the worst recession in six decades.

Output at factories, refineries and mines declined 1.9 percent from a year earlier, adjusting for the number of working days, after contracting a revised 1.6 percent in September, the National Statistics Institute said today in an e-mailed statement from Madrid.

Spain’s economy stagnated in the third quarter as austerity measures aimed at taming a surge in borrowing costs undermined the recovery from the almost two-year recession. The government is implementing the deepest budget cuts in at least three decades to pare the euro region’s third-largest deficit by half in two years, even as unemployment remains the highest in Europe at more than 20 percent.

Spanish gross domestic product will contract 0.3 percent this year and expand 1.3 percent in 2011, according to the government’s forecasts. The Organization for Economic Cooperation and Development sees a 0.2 percent contraction this year and 0.9 percent growth in 2011.

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

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

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