Spain’s Industrial Sector Shows Resilience in March Amid Mixed Sectors

The Spanish economy delivered a modest yet encouraging performance in March 2025, with industrial production rising by 0.9% month-on-month and 4.8% year-on-year. While the headline figures reflect resilience, deeper analysis reveals stark contrasts across sectors, driven by energy volatility, shifting consumer demand, and broader macroeconomic trends.

Monthly Growth: Energy and Non-Durable Goods Drive Gains

Spain’s industrial output expanded in March, with energy production and non-durable consumer goods leading the charge. Energy output rose by 0.8%, while non-durable consumer goods surged by 2.7%, likely fueled by seasonal demand for food, textiles, and pharmaceuticals. Meanwhile, durable consumer goods dipped by -0.4%, signaling a slowdown in big-ticket purchases like appliances or vehicles.

The monthly increase placed Spain among moderate performers in the EU. While Belgium and Ireland saw double-digit jumps, Spain’s 0.9% gain aligns with a gradual recovery from February’s weaker 0.4% expansion. However, the euro area’s 1.1% monthly growth highlights that Spain is neither outperforming nor lagging behind its peers.

Annual Growth: Outperforming the Eurozone

Year-on-year data paints a clearer picture of Spain’s relative strength. Industrial production grew by 4.8% in March 2025 compared to March 2024, far exceeding the euro area’s 1.2% and the EU’s 0.6%. This outperformance was driven by non-durable consumer goods, which rose by 8.1% annually, offsetting declines in intermediate goods (-2.2%), capital goods (-1.7%), and durable consumer goods (-2.2%).

Spain’s sectoral divergence mirrors broader European challenges. While non-durable goods benefited from rising household spending and supply chain stability, industries tied to investment—like capital goods—struggled amid elevated borrowing costs and cautious corporate sentiment.

Price Pressures Ease, but Risks Remain

Producer prices offer a nuanced outlook. Spain’s industrial producer prices fell by -3.9% month-on-month in March, largely due to a -5.5% drop in EU energy prices. However, annual producer prices rose by 4.8%, reflecting persistent inflationary pressures in sectors like non-durable goods. This dynamic could pressure profit margins unless companies pass costs to consumers—a risky strategy in a slowing economy.

Regional Context and Outlook

Spain’s 4.8% annual growth ranks it among the EU’s top performers, trailing only Lithuania and Luxembourg. Yet its 126.1 industrial production index (2021=100) dipped slightly from February’s 131.2, underscoring volatility in energy-driven sectors.

Investors should monitor two key trends:
1. Non-durable goods momentum: The 8.1% annual surge suggests pent-up consumer demand, but this could reverse if inflation resurges.
2. Capital goods stagnation: Declines here signal weak business investment, which may limit long-term growth.

Conclusion

Spain’s industrial sector remains a mixed bag. While non-durable consumer goods and energy production offer bright spots, broader weaknesses in investment-oriented sectors and price volatility pose risks. The 4.8% annual growth outpaces the euro area, but investors must weigh Spain’s cyclical strengths against structural challenges.

Key data points reinforce this cautious optimism:
- Non-durable goods growth (+8.1% YoY) suggests household resilience, supported by low unemployment (12.7% in March).
- Energy prices declining by -5.5% in the EU could reduce input costs, benefiting industries like chemicals and manufacturing.
- Regional comparisons: Spain’s performance contrasts sharply with Germany’s -3.7% annual decline, highlighting its position as a relative safe haven in a slowing euro area.

For investors, Spain’s industrial sector offers opportunities in consumer staples and energy, but caution is warranted in capital goods and durable goods until corporate investment stabilizes. The data suggests resilience now—but sustainability depends on whether Spain can convert short-term gains into long-term growth.

Data sources: Eurostat, Spanish National Institute of Statistics (INE), and author’s calculations.