Last week, the National Institute of Statistics (INE) released the Turnover Index (ICNE), a publication that served to fuel debate and speculation about the true pace of growth of the Spanish economy. This indicator amalgamates the information from four other indicators, each representing a sector of our economy. The objective is to know the evolution of the billing of Spanish companies on a monthly basis. Precisely, what caught the attention of many analysts is the persistent negative trend that the ICNE has been exhibiting in recent months, with the month of March standing out for its marked fall. This apparent downward spiral has raised all kinds of conjectures and concerns, with some interpreting these numbers as a clear sign that our Gross Domestic Product (GDP) is not being correctly measured or that, for others, things are not going as well as the official figures seem to indicate. However, such interpretations are the result of haste in the reading of an indicator and its evolution that deserve a calm time to know what it may be telling us. And the fact is that, in the complex world of economics, the “raw” numbers, On their own, they may not tell the whole story. In fact, they may be hiding it. Seasonal factors and other sectoral nuances may be influencing this data, so it is essential to analyze it within a broader context to obtain a more accurate picture of our economic situation. Avoiding over-interpretation and considering multiple variables are essential steps to obtain a clearer vision of our economic situation and make informed decisions for the future. Thus, when carefully observing the ICNE graph that accompanies this text, two lines can be observed . The first reflects the year-on-year growth of turnover in gross values, without correcting or deflating, which is how this indicator is initially presented, and whose fall in March has filled the headlines. Another line, the adjusted series of seasonality and calendar, reflects a nuanced reality that takes precedence over the previous one to tell us the story that underlies the indicator.Belén Trincado AznarIn the complex analysis of economic indicators, it is crucial to unravel the different layers that cover it to obtain an accurate image of the underlying trends that govern the economic processes that we want to assess. Seasonality, on the one hand, introduces temporal variations that can distort the perception of true economic dynamics. However, we cannot ignore the calendar adjustment, which takes into account changes in holidays and workdays over time. A simple example would illustrate this last point. Thus, any month with an additional weekend compared to the same month of the previous year may present a 5% drop in economic activity simply due to this difference in the availability of business days. In addition, moving holidays, such as Easter, can significantly influence the comparison of interannual data, especially in the months of March and April. By making the necessary adjustment for seasonality and calendar, we obtain a more precise vision of the economic reality. . In the case of the ICNE, this filtering reveals a drop of 6.5%, as opposed to the 10.6% initially reported by the INE. Thus, these four points are due to factors that are simply explained by the months of the year and the moving holidays and not by fundamental trends in the economy. However, even with these adjustments, the drop is still significant. What could be behind this abrupt decline? When reviewing the table with which the INE accompanies the data presented, one figure should draw our attention: that of the electric energy sector, with a drop of 37%. It is essential to note that this indicator measures the turnover without deflating , so they are presented at current prices, which should lead us to wonder if activity in the electricity sector has decreased in March or, simply, what has happened is that the price of energy has fallen. The data strongly suggests the latter option. In fact, when examining the correlation between the sector's billing and the price, a significant connection is evident, as it could not be otherwise. And the 37% drop in the electricity sector's billing, linked to the correction of electricity prices, was largely due to adverse weather conditions at the end of the month. Adverse conditions that, however, were beneficial for our pockets and swamps. And it wasn't just March. By excluding the electricity sector from the data series (see again attached figure), a considerable part of the evolution of the indicator in the last year is due to the correction of electricity prices. That said, however, even After this adjustment, a moderate drop of 0.9% in the turnover persists, which still suggests a situation that we cannot consider positive. And it is here, after eliminating the layers that do not allow us to see the heart of the matter when it comes to searching for and understanding the possible causes that may be behind March's behavior. Knowing that the commerce sector accounts for the fall in March beyond energy, it is time to think about what could have happened. It could have happened that prices in the sector have experienced a decrease. Or that we have simply bought less: when analyzing the Retail Trade Index (ICM), it is confirmed that there are falls in the consumption of durable goods, although no negative behavior is observed in other sectors. High-frequency data from BBVA Research tells us about a drop in consumption in March and April that is offset by what we know about May. Knowing this, could it be that during Easter we bought fewer durable goods? Is it possible that the rains at the end of the month have negatively affected sectors such as the hospitality industry? It seems that there is something of this, which will surely be linked to other issues. However, and in conclusion, what we must understand is that it is very important to avoid hasty conclusions when interpreting economic indicators. It is imperative to carry out an in-depth analysis, identify the possible causes of the observed behaviors and focus on the refined and contextualized data. Follow all the information from Cinco Días on Facebook, x and Linkedin, or in our Five Day Agenda newsletter
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