MacroEconomic Bulletin - November 2022

MacroEconomic Bulletin - November 2022



Further indicators continue to point to a slowdown in China's economy. The Chinese manufacturing activity contracted again in November, declining for the second consecutive month with an index of 48 points. The slowdown in the country's economic growth is being caused partially by its zero covid policy. Until now, China's slowdown has been putting less pressure on oil demand and easing oil prices. However, with the relaxation of some measures in response to the protests of the last couple of days, we could possibly witness a reverse in this trend, with oil demand rising and supply becoming increasingly tight with the embargo on Russia and the OPEC cuts.

Eurozone PMI improves in November but remains in contraction zone. The Eurozone composite PMI improved slightly (47.8 points versus 47.3 in October; Flash estimate), although remaining in the contraction zone (below 50 points). This improvement is due to the easing of the pace of price increases in some countries, as well as the improvement in the business outlook. Moreover, despite continuing to lead the slowdown, the manufacturing sector was the largest contributor to the improvement, while the services sector was stable. All in all, activity appears to be continuing the slowdown trend that began at the end of the third quarter, albeit at a slower pace than initially expected.

Inflation moderates in the Eurozone in November. Prices slowed for the first time in 17 months in the monetary area, with CPI growth slowing to +10.0% yoy (+10.6% in October), although maintaining high levels. This decline is due to the moderation of energy prices in November. Nevertheless, the Baltic countries continue to lead the rise in prices, with rates exceeding +20%, while Spain and France recorded the lowest inflation rates. Likewise, Germany followed a similar trend as the Eurozone (-+10.0% vs. +10.4% in October) while Italy stood at +11.8%. Thus, due to the latter data we expect an easing of the pace of ECB hikes, with a 50 basis points hike at its next meeting in December.


EthiFinance Ratings has revised its forecasts for the Spanish economy, with higher growth in 2022 than initially expected (+4.4% vs. +4.3%) but lowering those for 2023 to +0.9%, from +1.9% estimated in September. This revision is based on the expected impact of higher prices and tighter financial conditions that will weigh on household consumption and production. In addition, the global economic slowdown, especially in Europe, is another of the main risks, hampering Spanish exports, which are a fundamental pillar for the Spanish economy. Meanwhile, the Spanish labor market is holding up with a fall in unemployment of 33,512 people in November, although job creation decelerated.

Inflation continued to decrease in November (+6.8% vs. +7.3% in October; Flash estimate), also presenting a month-on-month decrease (-0.1%), mainly influenced by the moderation of fuel and electricity prices. However, core inflation remained elevated, increasing to 6.3% yoy (+6.2% previously). Furthermore, we observe a similar trend in other price indicators. In October, the export price index fell to +12.0% yoy (+16.0% in September), decreasing by -0.8% on a monthly basis, with energy and intermediate goods as the main decliners. Import prices also fell to +19.3% (+28.2% in September), presenting a monthly decrease of -0.9%, in addition, energy and intermediate goods moderating the most. In the same way, industrial prices drop to +26.1% yoy (+42.9% in August), highlighting mainly the monthly decrease (-1.4%), with the same products as the most reduced. Thus, it appears that inflationary pressures from commodities may be easing.

With regard to public finances, Spain's public debt continues to rise in absolute terms, reaching a new gross maximum. However, due to economic growth, the debt has reduced by 0.1 percentage points to 116% of GDP, besides, due to the good performance of tax collection, the planned public debt issuance is reduced by 5,000 million this year. In this sense, the increase in prices and the recovery of the economy is favoring revenue collection, which in October stood at 96.3% of the expected level for 2022, so that the deficit is estimated to be below the anticipated 5.0% of GDP, albeit maintaining a high level.


The INSEE confirmed French GDP growth in the third quarter at +0.2% qoq and +1.0% yoy. Hence, the slight slowdown in the third quarter is confirmed, after the rebound in the second (+0.5%). Nonetheless, there are some variations in the composition of growth compared to the Flash estimate. Thus, although domestic demand remains the largest contributor to growth -external demand contributed negatively- this is due to the good performance of investment, while household consumption registered a contraction -no change was initially expected-.

Inflation held stable in November (+6.2% yoy; Flash estimate), favored by the moderation of energy and fuel prices, while the price of food and manufactured goods increased as well. However, the trend continues upward, with a month-on-month growth of +0.4%, although somewhat below that of October (+1.0%). On the other hand, we highlight the relaxation in the pace of price increases of industrial products, with a month-on-month decrease of -1.1%, decreasing the year-on-year rate to +21.4% (previously +26.0%). Similarly, it was the prices of energy-related raw materials and other chemicals that had the most downward influence, while the rest of the products exhibited an advance.

Furthermore, other economic indicators point to a more stable outlook. In this sense, the labor market has remained resilient to the current economic situation, with a virtually stable unemployment rate at the end of the third quarter (7.3% compared to 7.4% in 4Q2021). In addition, expectations indicators are holding steady in November, although consumer confidence remains in pessimistic territory (83 points, albeit far from the July 2022 peak of 79). On the supply side, the trend is similar, remaining at 102 points, although we note that the outlook for all sectors worsens except retail and wholesale trade, which improves, potentially indicating better projections for consumption.


The Portuguese INE has confirmed the growth rate for the third quarter, standing at +4.9% yoy and +0.4% qoq. On a year-on-year basis, domestic demand continued as the main growth driver +(2.9% vs. external demand +2.0%), in addition, we highlight the resilience of private consumption (+4.4%), while investment presented a contraction (-0.4%).  Moreover, our Portugal's unsolicited credit rating review was published, which remains at BBB with a change in outlook from Stable to Positive, based on the economic recovery and fiscal correction observed.

The CPI moderated slightly in November (+9.9%, Flash estimate), below the rate recorded in October (+10.1%). Nevertheless, the monthly trend continues to increase, although to a lesser extent than in October (+0.3% compared to +1.2%), while core inflation remains on an upward trend (+7.2% yoy as opposed to +7.1% in October). Besides, we highlight the moderation in industrial production prices in October (+16.2% yoy vs. +19.7% in September), with a monthly decrease of -0.4% (+2.6% in October).

Additionally, other conjunctural indicators have been released, while the trend of expectations are uneven between supply and demand, the labor market is holding up in spite of the worsening of industrial production. Consumer confidence continues to decline, reaching levels similar to those prior to the pandemic. On the supply side, the outlook is different, with a generalized improvement in all sectors. In addition, the labor market remained virtually stable in October, with an unemployment rate of 6.1% of the labor force. On the other hand, industrial production contracted in October, decreasing by -2.0% (+0.3% in September), leaving behind the growth levels of recent months.