Industry sales, buoyed by rising prices and the end of the supply crisis

The turnover of the industry has grown by an average of 23.9% in the first eight months of 2022The industrial activities that register the greatest increases are oil refining, jewelry manufacturing and paper manufacturingDespite the good billing data recorded until August, some figures already point to a fall in industrial activity Despite the economic uncertainty, the rise in the prices of raw materials and the heavy energy bill that it has had to bear, Spanish industry managed to increase its sales 23.9% in the first eight months of the year. This is reflected in the business figures for the sector, seasonal and calendar effects eliminated, published this Friday by the National Institute of Statistics. The numbers, which refer to the turnover of the different industrial activities, highlight a strong rise in those related to energy, specifically those of coking plants and oil refining. These have doubled their sales in the period (they have grown by 112%), and register an increase of close to 85% compared to the month of August of last year. On the other hand, there are only two activities that have seen their turnover drop between January and August: the tobacco industry, which fell by 3.1%, and the manufacture of computers and telecommunications equipment, whose sales were reduced by 2.8%. The impact of the end of the pandemicThe accumulated improvement in industry sales is fundamentally due to three factors: On the one hand, it must be taken into account that the comparison is made with the first eight months of 2021, in which a stoppage of activity, especially in the first quarter, motivated by the arrival of ómicron and also by the impact of the Filomena storm. Although this year the factories have had to face the energy crisis, with sharp rises in gas and electricity that have sometimes forced them to reduce production due to unaffordable bills, there is another crisis that last year caused them enormous problems and that is being overcome: that of supplies, caused by the bottlenecks after the pandemic. Finally, it should be noted that the INE collects business figures in terms of billing, including the effect of the rise in prices. And until August, average annual inflation stood at 9%. All these aspects explain the improvement in sales in the industrial sector in the first eight months of 2022, in which, in addition to refining activities, manufacturing stands out. jewelry, bikes and motorcycles, the paper industry or the leather and footwear industry. Monthly increaseIn a monthly comparison, industry sales increased by 4.1% compared to July, eliminating seasonal and calendar effects; a rate eight points higher than the previous month. Compared to the month of July, only energy registers negative rates (-10%). The positive variation of the manufacture of vehicles (38%), extractive industries (12%) and the manufacture of beverages (10, 5%). Fall in ordersThe good business figures for the industrial sector published by Statistics show, in any case, the evolution of sales until the end of the summer; although there are other data that already warn that the photo could be starting to change due to the economic situation. This is how the latest data on the activity of the Spanish factories included in the manufacturing PMI index advances. According to this indicator, industrial activity contracted in September due to the context of inflation and “indecisive” demand. Thus, the index returned to below 50 (which implies a contraction in activity) and marked its second worst figure since the beginning of 2021. According to those responsible for S&P Global Market Intelligence, which compiles the index, last September the Factories had a “difficult” month as output and new orders fell, and declines in employment and future confidence were recorded.