Billing and employment, facing its best quarter since the pandemic

Although the economy has grown strongly in recent years, The situation for a good part of the companies has left much to be desiredgiven that its margins have been compressed due to the sharp rise in costs and the increase in the burden of interest and their sales, limited by losses in purchasing power of many families and the atony of the rest of Europe. However, something seems to be changing, as companies are now aiming for their best quarter since the Covid pandemic, according to a survey published yesterday by the Bank of Spain.

According to the Survey of Spanish companies on the evolution of their activity in the second quarter of this year, where the supervisor of the financial system compiles the opinion of more than 6,500 companies, Spanish companies will register intense growth in turnover between April and June, the greatest advance since 2021, and also They will increase their workforce at one of the highest rates in recent years. And, if we add to this the very good prospects in both sections for the next quarter, the result is that National companies face their best period since the survey beganin the fourth quarter of 2020.

So, “billing would have increased significantly, after three consecutive quarters of declines,” according to the report, and “the percentage of companies surveyed whose sales have increased in this period is 32.3%, 10.1 percentage points more than in the previous quarter”, but this evolution “maintains a marked heterogeneity”. “Among the sectors that see the greatest increases in sales in this quarter, they stand out hospitality and administrative activities. On the contrary, agriculture and commerce, which have chained nine and ten consecutive quarters of declinesrespectively, continue to exhibit unfavorable behavior,” the text states.

A replica of this behavior of income is also observed in the job creation, where 18.5% of companies declare that they have increased their workforce compared to the beginning of the year, four points more than in the first quarter. “In line with the sectoral pattern observed in billing, it is worth highlighting the improvement experienced by employment in hospitality services and professional and administrative activities, in contrast to the declines observed in agriculture and real estate services”. Especially serious is the case of the agricultural sector, where “the employment indicator accumulates nine consecutive quarters of declines, in line with the declared declines in billing.”

Besides, This improved economic outlook is encouraging new investmentswhich are favored by the increase in demand, the arrival of European funds and the reduction of interest rates which was already expected at the time of the survey, in the second half of May. In fact, 18% of companies have announced an increase in their level of investments, three points above the figure for the previous quarter. An advance in which highlights the strong “dynamism of capital and intangible assets” compared to land and buildings, the better performance of large companies. Furthermore, “by productive branches, industry and transportation register the greatest advances in investment both in the last year and in terms of the prospects for the coming months, given the sluggishness observed in agriculture and construction,” the text adds.

Inflation

However, the report also provides some worrying signs, mainly regarding costs, sales prices and profit margins, since inflationary pressures have moderated compared to last year but will take time to completely dissipate. On the one hand, 47.2% of companies continue to notice a certain increase in the prices of its inputs, and “looking ahead to the third quarter, the companies surveyed anticipate similar cost pressures.” For another, 25.1% of companies declare that they have raised their prices in this quarter, 11.5 points less than the previous one, but “the outlook for the third quarter points to a slight rebound in price increases.” And finally, the increase in costs, both in the current and previous quarters, as well as in the forecasts for the future, will be higher than the price increase, which points to a contraction of margins. This is largely due to the fact that 68% of companies foresee strong increases in labor costs and 41.1% perceive “labor availability problems” in some positions.