Spanish industrial production fell for a 10th straight month in June as the recession in the euro area’s fourth-largest economy worsened amid more austerity measures to stem a surge in borrowing costs.
Output at factories, refineries and mines adjusted for the number of working days, fell 6.3 percent from a year earlier, after declining a revised 6.5 percent in May, the National Statistics Institute in Madrid INE said in an e-mailed statement today. Economists forecast an annual drop of 6.2 percent, according to the median of eight estimates in a Bloomberg News survey.
Prime Minister Mariano Rajoy last month gave up on the prospect of an economic recovery next year as he increased to more than 100 billion euros ($124 billion), or 10 percent of annual output, the amount of budget cuts and tax increases planned through 2014 to tackle the euro area’s third-largest budget gap.
Spain’s recession intensified in the second quarter, while unemployment reached 24.6 percent, the highest in the country’s 34 years of democratic history. The number of bankruptcies increased 28.6 percent in the three months through June from a year ago, INE said on Aug. 6.
U.S.-based materials manufacturer Formica Corp. said June 29 it is in talks with about 180 workers for mass layoffs as falling volume has made keeping two plants in Spain unviable. Weeks earlier, Spanish clothing designer Adolfo Dominguez presented a plan to cut 3 percent of its workforce.
Expectations of a European Central Bank intervention to lower Spain’s borrowing costs have muted a drop in Spanish debt. The yield on Spain’s 10-year benchmark bond was at 6.93 percent at 8:18 a.m. in Madrid, compared with a euro-era intraday high of 7.75 percent on July 25, a day after the government signed off on as much as 100 billion euros of loans from European rescue funds for the country’s banks.