Spanish industrial output declined less than economists expected in March, suggesting that the recession in the euro area’s fourth-largest economy is abating.
Production at factories, refineries and mines adjusted for the number of working days fell 0.6 percent from a year earlier, after declining a revised 6.9 percent in February, the National Statistics Institute in Madrid said in an e-mailed statement today. That’s the smallest decline since Prime Minister Mariano Rajoy took office in 2011 and compares with economists’ forecast for a 5.3 percent decline, according to six estimates in a Bloomberg News survey.
Rajoy is seeking to end a six-year slump after implementing the toughest austerity measures in the nation’s democratic history and changing labor rules to enable companies to cut payroll costs. He won approval from the European Commission to slow cuts in the European Union’s largest budget deficit last month.
The yield on Spain’s 10-year benchmark bond fell below 4 percent on May 3 for the first time since October 2010 after the European Central Bank cut its benchmark lending rate to a record low 0.5 percent to rekindle growth in the 17-nation euro region. The yield was little changed at 9:02 a.m. today, trading at 4.09 percent.
International Monetary Fund Managing Director Christine Lagarde said she supported Rajoy’s mid-term budget plan presented on April 26, increasing pressure on officials in Brussels and Berlin to back away from austerity-first policies. Both the commission and the IMF forecast Spanish unemployment will peak this year as output contracts 1.5 percent before the economy will return to growth in 2014.
Ford Motor Co. and General Motors Co. conducted talks with unions to freeze wages after new passenger car registrations for March dropped 14 percent in Spain and 10 percent in the EU. At Schneider Electric SA, the world’s biggest maker of low- and medium-voltage equipment, sales growth in southern Europe will “very complicated,” Chief Financial Officer Emmanuel Babeau said on April 23.