Chart of the Week: Spanish sentiment slips, but growth likely to hold up

Fathom’s Economic Sentiment Indicators (ESIs) aim to distil the messages from numerous surveys into a single composite measure of underlying sentiment. Since 2017, there has been a gap between hard and soft economic data in Spain, as in other countries, but this is now starting to close, with Fathom’s Spanish ESI falling 0.2 percentage points to 0.6% in October. However, this is unlikely to represent a major turning point for the outlook for the Spanish economy. Indeed, domestic demand — the main driver of Spanish growth since the crisis — remains robust, increasing by 1.1% in the last quarter. This trend is likely to continue in the coming quarters, especially if household incomes continue to rise and employment converges towards its pre-crisis level.

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