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September 1, 2015

Growth of investment, employment and wealth of the Spanish property market

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Another semester, the Spanish economy is based on domestic demand and investment for its growth, and it is these two variables that show some of the most important annual improvements in the construction sector. Investments increased between April and June 2015 by 5.1% compared with 2014; employment increased by 9.2%, and financial wealth generated by the sector increased by 5.8%. At the same time, all these variables increased by a tenth compared with data from the first quarter of this year.

The Spanish economy is growing at a rate of 3.1%, according to the forecasts made by leading governmental organizations. According to the National Statistics Institute (INE), in the period from April to June 2015, domestic demand and investment once again become the main engine of progress, leading to the growth of national GDP. In this case, the construction sector plays an important role.

In terms of investment, employment and wealth creation, the construction sector in Spain has been one of the leading sectors in annual figures. In addition, while Spain is growing at the fastest pace since 2007, the construction makes it at a pace not seen since 2000 and 2006 years.

"Investments in construction in Spain rose by a tenth on an annual basis, that is, from 5% to 5.1%, reflecting growth in both the investment in residential properties, as investments in other constructions" – annotated the INE.

The registered growth of 5.1% annually, which have been able to achieve investments in the construction sector in the second quarter of this year, is more than double than the figure achieved in the last three months of 2014 (when it grew by 2.4%) and is also the highest since the fourth quarter of 2006, when it stood at 5.5%. Thus, the indicator measuring the gross fixed capital formation peaked in the last eight and a half years.

Another clear indicator of the recovery of the construction market in Spain is the number of employees in the sector, which continues to grow at a rate above 9%, as it already did in the first quarter of this year.

In particular, during the period between April and June 2015, employment in construction increased by 9.2%, which is one tenth higher than the indicator of January-March 2015, a number that is not currently showing any other sector of Spanish economy, according to INE. This allows the construction industry to increase the number of workers at the fastest rate recorded since the beginning of this century. The highest figure, however, was the increase of 12.4% at the end of 2000.

The National Institute of Statistics of Spain also highlights another fact: the positive development of the added value created by the construction sector. That is, the difference between is consumed by brick industry (as raw material), and all that it produces.

Again, as we have seen in two previous cases, the wealth generated by construction sector increased by one tenth during the period April to June 2015, i.e. to 5.8% from 5.7% of first trimester. We have to go back in time to early 2001 to find similar figures.

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