After the energy chaos in March, two-thirds of companies expect higher labor costs in the coming months, according to the Bank of Spain
Spanish companies see a more dynamic evolution of their turnover in the second quarter of this year, after the decline in the first three months of 2022, strongly conditioned by the effects of the Russian invasion of Ukraine. Although this recovery remains below the expectations formulated at the beginning of the year, as highlighted by the Bank of Spain in its ‘Survey of Spanish companies on the evolution of their activity’.
After analyzing more than 5,500 interviews with the companies that offered to do so, the indicator measuring activity improved “though only slightly” between April and June in relation to the proportion of companies indicating an improvement in their sales. . The percentage of respondents whose revenue increased during this period is 29.7%, up from 27.1% in the previous quarter. Looking at the short-term outlook, just over a third of the companies in the sample expect an additional increase in their sales in the third quarter, closely linked to the summer.
The economic recovery, while modest, is centered in the service sectors, such as hotels and transportation, which have benefited from the end of restrictions linked to the pandemic. In terms of prices and costs, the companies surveyed continue to see additional increases in the costs of their intermediate consumption, albeit slightly lower than in the previous quarter.
The company turnover shows a remarkable heterogeneity by industry. It is particularly worth noting the very favorable behavior of the service sectors, which in the past have been more affected by the pandemic and which are now benefiting from the removal of restrictions introduced to contain the spread of the disease. For example, the largest revenue increases in the second quarter of the year are in the hotel, transport and leisure sector, complemented by the information and communication sector, which has shown positive behavior since the start of the health crisis. On the contrary, billing would be reduced in agriculture, construction and administrative activities.
By contrast, the employment volume at the surveyed companies will increase in the second quarter of the year, albeit just as turnover was expected slightly less than three months ago. So while the majority continue to say that employment has remained stable — specifically in 74.3% of the sampled firms — employment is said to have grown in 14.5% of them, slightly less than indicated in the first quarter. For the third, companies predict a slight acceleration in job creation on average. Compared to the pre-crisis level at the end of 2019, the companies surveyed state that employment in the second quarter of 2022 is 1.6% below that level, while in the case of invoicing the difference is 3.5%.
With regard to intermediate consumption costs and selling prices, the survey results point to a continuation of high inflationary pressures (see Chart 1.5). Specifically, the vast majority of companies, 76.8% of the total, report experiencing an additional increase in the prices of their manufacturing inputs in the second quarter of the year. Now that rate is nearly 5 percentage points lower than it was three months ago, suggesting that these inflationary pressures could begin to abate.
This incipient slowdown in cost pressures is generalized by industry, with the exception of construction and the hotel sector, where, on the other hand, a new intensification of these tensions is said to have been observed. In addition, in the sample as a whole, the percentage of companies4 Specifically, companies are asked to assess the evolution of employment once the workers affected by an ERTE are excluded.
When the Bank of Spain asks companies about their outlook a year from now, the results point in the same direction: respondents expect input cost pressures to remain high, but slightly less than three months ago. Specifically, 72% of companies expect their costs to be higher than the current ones in that time horizon, 6 points less than in the previous edition of this report. Likewise, the percentage of companies that expect higher wage costs in a year, at 67%, remains very high, although it is about three points lower than last quarter.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
