Business... at a glance June 2018 Círculo de Empresarios
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In May, the Industrial Price Index (IPRI) recorded a year-on-year increase of 2.9%, driven by an 8.8% rise in energy prices and a 2.6% increase in intermediate goods prices, while non-durable consumer goods prices fell by 0.6%. The service sector accounted for 42% of GDP in 2016 and had over 1.5 million companies and €471 billion in turnover. SMEs are expected to generate over 500,000 new jobs by 2019, though job growth will slow to 2.6% annually due to declining construction employment. In June, OPEC and non-OPEC producers agreed to increase oil production by 700,000 barrels per day to
Business... at a glance June 2018 Círculo de Empresarios
- 1. YoY change HEADLINE INDEX 2.9 Durable consumer goods 1.4 Non-durable consumer goods -0.6 Equipament goods 0.9 Intermediate goods 2.6 Energy 8.8 22.7 18.2 16.9 42.2 Transport and storage Professional activities Telecommunications Other sectors 38,249 32,404 18,962 60,469 31,211 18,624 280,175 256,217 219,015 0 50000 100000 150000 200000 250000 300000 350000 400000 2017 2018* 2019* Agriculture Industry Construction Services 360 380 400 420 440 460 480 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 500 1000 1500 Number of companies (right axis) Turnover (left axis) 2.9 1 0 2 4 6 8 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Headline Core Business structure In 2016, the number of companies in the service sector reached 1,546,525, 14.3% more than in 2015. Likewise, its turnover grew by 4.6% per year to 471 billion euros (42% of GDP in 2016 ). Employment at SMEs In 2017, according to Randstad and CEPYME, SMEs1 created 381,089 new jobs, 78.8% of the total employment created. Similarly, forecasts show that over the next two years more than half a million jobs will be generated, with 82% concentrated in the services sector. However, estimates indicate that the pace of job creation will slow down in 2019 to 2.6% per year, 1.5 pp less than in 2017, mainly due to the abatement in demand for employment in the construction sector (-69.2% since 2017). Industrial Price Index In May, the Industrial Price Index (IPRI) recorded a year-on-year increase of 2.9%, 1.1 pp higher than in April, and excluding the effect of energy (1%), 0.1 pp less than the previous month. By sectors, after energy (+8.8%), the largest increase was in intermediate goods (+2.6%), as opposed to non-durable consumer goods that decreased by 0.6%. By sectors, transport and storage stood out in turnover, which accounted for 22.7% of the total, professional activities (18.2%) and telecommunications (16.9%). Business… at a glance June 2018 Sectoral distribution by turnover % of total Business structure of services sector Billion € and thousands of companies Sources: Círculo de Empresarios based on INE, 2018 Industrial Price Index YoY change (%) Source: Círculo de Empresarios based on INE, 2018 SME’s employment creation by sectors Number of jobs Source: Círculo de Empresarios based on CEPYME and Randstad Research, 2018 Annual change (%) 4.1 3.3 2.6 *Forecast 1 Companies with 1 to 249 employees
- 2. ‘Business at a glance’, a publication of the Círculo de Empresarios produced by its Department of the Economy, contains information and opinion from reliable sources. However, the Círculo de Empresarios does not guarantee its accuracy and does not take responsibility for any errors or omissions. This document is merely informative. As a result, the Círculo de Empresarios is not responsible for any uses that may be made of the publication. The opinions and estimates of the Department can be modified without prior warning. www.circulodeempresarios.org 117.6 101.8 100 105 110 115 120 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 -13.4% 56 53 51 46 46 29 55 50 48 43 41 35 Sweden Germany France Spain Netherlands Ireland Have reduce business operations in the UK Have reduced investment in the UK 82% 86% 96% 93% 103% 129% 135% 136% 155% 167% 171% 162% Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Target: 1.2 mbd 75% 76% 130% 140% 114% 93% 99% 78% 65% 73% 70% 54% Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Target: 0.55 mbd -1.5 0.4 1.4 1.6 1.8 1.8 2 2.3 2.4 2.5 2.7 2.7 4.1 4.4 4.4 8 Portugal Italy Spain Denmark Belgium France Euroarea Germany Netherlands Sweden EU28 Ireland Austria Greece UK Poland Labour costs In Q1 of 2018, in year-on-year terms, the labour cost per hour worked increased in the euro area by 2% and in the EU28 by 2.7%. The least progress occurred in Spain (+1.4%) and Italy (+0.4%), while Portugal was the only country in which it dropped (-1.5%). Brexit and Business In the survey "Brexit and Business: The EU Outlook"2 (Baker Mckenzie), 46% of Spanish business leaders state that since Brexit they have reduced business operations with the United Kingdom, and 43% have cut back on investments. Of the six countries analysed, the lowest impact, both in trade and in investment, has occurred in Ireland. Ifo Business Climate Index In June, the confidence index of German business owners has fallen to 101.8 points, reaching its lowest level since October 2014. Since January 2018, it has fallen by 13.4%, mainly due to the uncertainty caused by the trade tensions between the US, China, and the EU. OPEC meeting In May, the cuts in oil production reached almost 1.9 million barrels per day, exceeding by 62% the commitment reached in November 2016, due in part to the lack of supply in Venezuela, Libya, and Angola. Therefore, in order to reach the agreed production levels, on June 22, OPEC and ten other producers agreed to increase the joint supply of crude oil from July to around 700,000 barrels per day. Oil production target Trade and investment implications of Brexit % of entrepreneurs surveyed Source: Círculo de Empresarios based on Baker McKenzie, 2018 Ifo Business Climate Index Source: Círculo de Empresarios based on CESifo Group Munich, 2018 OPEC nations Non-OPEC nations Source: Círculo de Empresarios based on Bloomberg, 2018 Labour Cost Index (LCI) Annual change (%) Source: Círculo de Empresarios based on Eurostat, 2018 2 800 business leaders from six EU countries were surveyed