As for most of Europe the
answer is undoubtedly  – No. According
to Prime Minister Mariano Rajoy, in a Wall Street Journal interview recently.
Spain is officially out of recession but like the rest of Europe, not out of crisis.
The facts seem to be these. At the end of Spain’s property boom, there was a
drop in incomes, and a depressed demand for goods.  One adult in four isn’t in work, and so, consumption has steadily
fallen. Allegedly, Spain still has over 25% unemployment with 54% of these
under 25 years of age, the majority of which still live at home. Keep in mind
that the labour laws in Spain make it very difficult for the employer to fire
people, so naturally keep it to a minimum. However, Spain has a massive black economy accounting for around 15% of
the unemployed.  When you come to Spain
you don’t see that many people out of work! So how can Spain have over 25% real unemployment? I don’t think so!

At the same time, property apart,
prices haven’t come down. There’s a debt overhang and Spain struggles to borrow
but still manages to do so. Tight credit for larger companies mean they delay
payments to smaller companies even more but are always historically slow. There
is some positive news though – there seems to be some light at the end of the
tunnel, as orders start to grow for manufacturers. Businesses have reported an
increase in orders, driven by a marked rise in new business from abroad.

However, while output, employment
and purchasing activity still fell, it was at a slower rate than before.

The seasonally adjusted Markit
Purchasing Manager’s Index – a composite indicator designed to measure the
performance of the manufacturing facet of the economy in Spain – posted 50.0 in
June, signaling no change in business conditions. May had a reading of 48.1
which ended a 25 month sequence of deteriorating operating conditions,
according to the financial information services suppliers.

The stabilization of business
conditions was aided by a rise in new orders, the first since April 2011. New
orders from abroad rose for a second successive month, and at a faster pace
than had been experienced for two years.

Respondents indicated that higher
new business has been received from a range of international markets. Higher
new orders contributed to a slowdown in the rate of production decline in June.
Although output continued to fall, the latest marginal reduction was the
weakest in the current 26 month sequence of contraction.

Meanwhile, backlogs of work
increased slightly – the first accumulation of outstanding business since
January 2011. For the third successive month, the rate of job cuts in
manufacturing, eased in June. The latest fall in employment was the slowest
since November 2010.

The rate of decline in purchasing
activity also slowed during the month, and again this was linked to the rise in
new orders. Input costs fell for the fourth consecutive month, with panellists
reporting declining raw material prices. Even so, the pace of reduction can
only be described as modest. Output charges also decreased in June, through a
mix of lower input costs and strong competition. Output prices have reduced in
each month since August 2011.

A reluctance to hold inventories,
was again a feature of respondent reports about manufacturing, during June.
They reported too that a lack of stocks at suppliers had been the main reason
for the lengthening of delivery times.

Clearly as with most of Europe’s economies, there are
many problems to still solve. Last year the government’s spending exceeded tax
revenue by 10.6%, and that cannot continue. Then, last year the population of
Spain fell for the first time in modern history. It seems many young Spaniards
are leaving to work and live abroad.