Business Climate in the Metropolitan Area of Barcelona

Economic and Infrastructure Studies Department

May 2016

1st Quarter of 2016 Report for Barcelona City Council

1

Business Climate in the Metropolitan Area of Barcelona

Situation in the first quarter of 2016 and outlook for the second

quarter of 2016.


May 2016


2

1. Business performance in the Metropolitan Area of Barcelona and its

sectors

2. Trends of the main business variables in the Metropolitan Area of

Barcelona and its sectors

2.1. Metropolitan Area of Barcelona

2.2. Industry

2.3. Construction

2.4. Retail

2.5. Hospitality

2.6. Other services

3. Outlook for business performance in the Metropolitan Area of


4. Outlook for the main business variables in the Metropolitan Area of



4.2. Industry

4.3. Construction

4.4. Retail

4.5. Hospitality

4.6. Other services

5. Technical information

6. Methodology


May 2016


3

1. Business performance in the Metropolitan Area of Barcelona and its

sectors

Businesses registered their best results since the data series began in

2009

The performance of businesses in the Metropolitan Area of Barcelona (AMB)

reached a historic high, registering their best overall results ever, according to the

Business Climate Survey conducted by Barcelona’s Chamber of Commerce and

Idescat on a sample of 1,178 businesses located in the AMB in April, 2016,

These overall positive business results prolong a yearlong positive trend that

began in the first quarter of 2015. These are the best results ever since data

collection began in Q1 2009. This improvement comes on the back of the previous

quarter that showed a slight increase in the percentage of business people that say

business performance has been favourable (28% in 4Q15 compared to 29% in

1Q16), while the percentage of executives who said that performance was

unfavourable remained stable at 14%. So the overall result shows a rise of one

percentage point up on 4Q15 as seen in Figure 1.

Figure 1. Business performance in the AMB

(Balance in %)

Source: Chamber of Commerce of Barcelona and Idescat

Business performance continued on the same positive trend seen in Q4 2015 across

the whole of Catalonia. Therefore, the differential between the two has widened

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I.09 II III IV I.10 II III IV I.11 II III IV I.12 II III IV I.13 II III IV I.14 II III IV I.15 II III IV I.16


May 2016


4

slightly in favour of the AMB for the second consecutive quarter, as can be seen in

Figure 2.

Figure 2. Business performance in the AMB and Catalonia

(Balance in %)


Business performance improved significantly for most sectors

compared to a year ago, only falling behind slightly in the case of ‘other

services’

All the sectors analysed in the Survey reported an improvement in business

performance in the first quarter of 2016 compared to the same quarter in 2015

(one year ago1) except ‘other services’ (whose overall balance fell by one

percentage point). However, there is a significant difference in the magnitude of

overall results across sectors. On the one hand, the construction sector still had an

overall negative balance, although this trend has almost stabilised and it is still

moving away from the negative numbers seen in previous years. And secondly, all

sectors have positive overall balances, but in varying degrees: from moderately

1 A comparison of the balance between Q1 2016 is carried out with the same quarter of 2015 because significant seasonalities affect some sectors, such as retail and hospitality when comparing Q1 2016 with the previous quarter (Q4 2015). Later in the sector specific sections we will analyse the most recent quarters compared to the previous quarter when there is no seasonality.

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I.09 II II

I

IV

I.10 II II

I

IV

I.11 II II

I

IV

I.12 II II

I

IV

I.13 II II

I

IV

I.14 II II

I

IV

I.15 II II

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IV

I.16

AMB Catalonia


May 2016


5

positive results in terms of retail to very strong positive results in the hospitality

sector.

Figure 3. Business performance in the AMB and its main sectors (Balance, in %)

Table 1. Business performance in the Metropolitan Area of Barcelona

and its main sectors

Barcelona Metropolitan Area

Percentage of businesses

Quarter. I

2015

Quarter. IV

2015

Quarter. I

2016

Situation during the quarter

Barcelona Metropolitan

Area2

Favourable 25 28 29 Normal 55 58 57

Unfavourable 19 14 14 Balance 6 14 15

Industry


Unfavourable 25 14 15 Balance -3 20 15

Construction


Unfavourable 27 16 22 Balance -10 7 -1

Retail



Hospitality



Other services




2 Barcelona’s Chamber of Commerce develops these findings for the whole of the Metropolitan Area of Barcelona based on average results for each sector in Catalonia divided by the results for the whole Catalan economy in terms of gross value added (GVA) because this data is not available at the AMB level.

-3-10

4

21

13

6

15

-1

5

59

1215

-20

0

20

40

60

80

Industry Construction Retail Hospitality Other services AMB

I Q. 2015 I Q. 2016


May 2016


6

2. Trends of the main business variables in the Metropolitan Area of



Results showing a moderation in sales prices in the AMB were the best

since the data series began

Trends showing a certain moderation in falls in sales prices continued in Q1,

represented by the least negative overall balance since the first quarter of 2009

(the beginning of the data series). Specifically, 11% of business executives

indicated that sales prices fell in the first quarter in the AMB, compared to 9% that

said prices increased.

The results per sector show a decrease in sales prices across all sectors, with

the exception of the hospitality sector, but with an overall balance close to zero.

Regarding trends, compared to the previous year all the sectors analysed recorded

lower overall negative balances (and a positive result in the hospitality sector), but

compared to the previous quarter, falls in sales prices in the industrial sector and

‘other services’ sector accelerated slightly. However, sales prices in the hospitality

sector increased (overall positive balance), which is the first time this has happened

in the first quarter for this sector, compared to the overall slightly negative results

seen in the previous quarter and also a year ago.

Figure 4. Trend showing sales prices in the AMB (Balance in %)


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-16

-5

-1

-10-7

-4 -4 -3

30

-6

-2

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0

20

40


I Q. 2015 I Q. 2016


May 2016


7

Employment trends worsen slightly compared to the previous quarter,

but improved compared to a year ago

Employment in the AMB in Q1 recorded a slightly positive overall balance, but it

was lower than the previous quarter because of the percentage of business people

in the AMB that indicated employment had risen (19% in Q4 and 16% in Q1).

However, compared to the previous year, employment improved because the

percentage of business people indicating a fall in fact decreased (from 17% in Q1

2015 to 12% from 17% in Q1 2016).

In terms of sectors, employment is positive across all sectors, except

construction and retail. However, when compared to the results of last year's

survey the trends are quite heterogeneous. Industry, ‘other services’ and

construction showed a favourable trend, with positive overall results for the first

two sectors, however, the overall balance continued to be negative despite these

improvements. The retail and hospitality sectors are in a worse position, with the

former showing a slightly negative balance, while the latter has seen its overall

positive balance reduced.

Figure 5. Employment trends in the AMB (Balance in %)


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-14

2

22

-6

-2

8

-8

-4

14

5 4

-20

0

20

40


I Q. 2015 I Q. 2016


May 2016


8

Table 2. Business climate in the Metropolitan Area of Barcelona

Metropolitan Area of Barcelona


Quarter. I

2015

Quarter. IV

2015

Quarter. I

2016

Quarterly trend compared to last quarter

Business performance



Sales prices

Increase 8 4 9 The same 76 87 80 Decrease 16 9 11 Balance -7 -5 -2

Number of workers

Increase 15 19 16 The same 67 69 72 Decrease 17 12 12 Balance -2 7 4


2.2. Industry

The AMB's industrial sector has had positive results for all the variables in the

first quarter of 2016, except for employment. However, the previous quarter saw a

slight decline in results for all variables analysed in the survey, except exports that

remained stable.

Business performance worsened in Q1 with an overall result that was less

positive than the previous quarter. This is due to a drop in the percentage of

business people that believe business performance is favourable compared to the

previous quarter (from 34% in Q4 to 30% in Q1), while the percentage that believe

that the trend is unfavourable has increased (14% in 4Q to 15% in Q1). The

resulting balance in Q1 is less positive than the last quarter of 2015.

Sales turnover abroad is the only variable that has improved slightly since

the last quarter and a year ago too, with a reduction in the percentage of business

people that expect this variable to have declined (6% in 1Q16 compared to 9% in

1Q15 and 7% in 4Q15) while those that believe this indicator is stable increase

(15%). However, figures show an annual decrease in the exports of goods from the

province of Barcelona by -1.2% in nominal terms for the first two months of the

year, compared with growth of 1% for the whole of Catalonia in the same period.


May 2016


9

The decline in sales prices in the industrial sector increased slightly in Q1

compared to the previous quarter with an increase in the percentage of business

people who believe there has been a fall in prices (up to 10%, 4% in the previous

quarter), a higher proportion than those that believe there has been a rise,

standing at 6% in Q1 (3% in the previous quarter).

Employment also worsened compared to the previous quarter, with a reduction

in the positive overall balance. While the percentage of business people that say

there has been a drop in the number of employees fell to 6% in Q1 (previously

standing at 8%), as well, the percentage of business people indicating growth in

employee numbers stood at 14% (21% previously). Therefore, the overall balance

in Q1 is less positive than it was in Q4 2015.

Table 3. Business performance in the industrial sector

Industry


Quarter I

2015

Quarter. IV

2015

Quarter. I

2016



Favourable 22 34 30

Normal 53 52 55

Unfavourable 25 14 15

Balance -3 20 15

Exports

Increase 15 15 15

The same 37 41 43

Decrease 9 7 6

Balance 6 8 9

Sales prices

Increase 10 3 6

The same 77 93 84

Decrease 14 4 10

Balance -4 -2 -4

Number of workers

Increase 15 21 14

The same 69 71 80

Decrease 16 8 6

Balance -1 14 8


The industrial sector in the AMB recorded better results than Catalonia in the first

quarter of 2016 across all indicators analysed, with the exception of exports. The

overall balance for business performance and employment is more positive than

that seen in Catalonia as a whole and the sales price balance is slightly less

negative than in Catalonia. Conversely, Catalan exports recorded a slightly higher

overall positive balance than in the AMB.


May 2016


10

Figure 6. Trends in the industrial sector in the AMB and Catalonia

in the first quarter of 2016 (Balance in %)


2.3. Construction

The construction sector in the AMB continues to show negative overall balances

across all variables studied. As well, the sector showed poorer results in terms of

business performance and employment compared to the positive trend seen in the

previous quarter. However, prices tended to fall less than previously.

Indeed, business performance in the first quarter again recorded slightly

negative numbers compared to the previous quarter when it registered a positive

overall balance for the first time. However, this negative number (close to zero) is

the second best result on this variable since 2009. In particular, the percentage of

employers that indicate business performance as favourable was 21% (23% in the

previous quarter) whilst 22% indicate it was unfavourable (16% in Q4 2015).

Falls in sales prices continue to slow for the fifth consecutive quarter and this

sector is no longer the one with the most negative overall numbers on this variable.

The percentage of negative answers (falling prices) dropped to 11% in Q1 (16%

15

9

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810 10

-6

4

-10

-5

0

5

10

15

20

Business performance Turnover abroad Prices Employment

AMB Catalonia


May 2016


11

the previous quarter), and this narrowly exceeded the percentage of positive

answers (price increases), which rose to 7% (2% in the previous quarter).

Employment again recorded a negative balance in Q1, with an increasing

number of business people (24%) indicating rises in employment (14% in the

previous quarter), while those pointing to a drop in employment remains at 16%.

Table 4. Business climate in the construction sector

Construction


Quarter I

2015

Quarter IV

2015

Quarter I

2016




Unfavourable 27 16 22 Balance -10 7 -1

Sales prices


Number of workers

Increase 14 16 16 The same 57 70 60 Decrease 29 14 24 Balance -14 2 -8


The construction sector in the AMB registered an overall balance that was

considerably more negative than that for the whole of Catalonia in terms of

employment. However, the overall result for business performance and sales prices

was less negative in the AMB than in Catalonia as a whole, especially regarding

business performance.


May 2016


12

Figure 5. Construction sector trends in the AMB and Catalonia first quarter of 2016 (Balance in %)


2.4. Retail

Favourable household consumption trends have affected the overall balance of

the retail sector in the AMB. Business performance has been positive in the first

quarter of 2016, stabilising its situation with respect to a year ago3. Sales prices in

the retail sector are still showing an overall negative balance, but this is very

similar to the previous year. However, employment has shown a negative trend.

Business performance recorded a slightly positive overall balance in Q1 2016

compared to the same period during the previous year, but lower than in Q4 2015.

This slight annual improvement is because of a decrease in the percentage of

business people that say business was unfavourable, standing at 21% (while last

year this figure was 22%), while the percentage saying business performance was

favourable was the same (26%).

Sales prices recorded a lower negative overall balance in Q1 than compared to

a year ago, because the percentage of negative survey responses (indicating

declines in prices) was greater than the percentage of positive responses (increase

in prices), with the former going from 17% in Q1 2015 to 12% in Q1 2016 and the

latter dropping from 12% to 10% in the same period.

3 As for the retail sector, the last quarter coincides with the Christmas period when this sector enjoys high turnovers, and discounts before winter sales (which is becoming increasingly widespread); while the first quarter of the year coincides with the winter sales.

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Business performance Sales prices Employment

AMB Catalonia


May 2016


13

Employment in the retail sector fell in the first quarter for the first time since

Q3 2014. Thus, the percentage of employers indicating a decline in employee

numbers increased from 13% in Q1 2015 to 15% in Q1 2016, while business people

saying employment rose in this sector fell from 15% to 11% for the same period,

resulting in a negative overall balance.

Retail in the AMB enjoyed better results than in Catalonia as a whole in terms of

business performance and sales prices. However, in terms of employment, the

overall balance for Catalonia was 0 compared to a negative balance in the AMB.

Table 5. Business climate in the retail sector

Retail


Quarter I

any 2015

Quarter IV

any 2015

Quarter I

any 2016





Sales prices


Number of workers

Increase 15 18 11 The same 71 75 74 Decrease 13 7 15 Balance 2 11 -4


Figure 8. Trends in the retail sector in the AMB and Catalonia, Q1 2016

(Balance in %)


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2

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0

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-4

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2

4

6


AMB Catalonia


May 2016


14

2.5. Hospitality

The hospitality sector in the Metropolitan Area of Barcelona continues to get the

best results in the Business Climate Survey in the first quarter of 2016, with the

highest overall numbers since the data series began.

It is worth noting, however, that these fine results are largely seasonal, with the

Easter period in 2016 included while Q1 2015 only included the first three days

(Palm Sunday, and Holy Monday and Tuesday). In addition, we need to add in fine

results in terms of tourism and private consumption, and the highly successful last

edition of the Mobile World Congress. All this has meant that 2016’s result is the

best quarter since 2009 on all variables analysed, with the exception of

employment, which recorded a slightly lower overall balance compared to that of

Q1 2015.

The significant improvement in business performance in Q1 is due to an

increase in the percentage of business people indicating that business performance

is favourable, rising to 65% (39% last year), while the percentage of business

people indicating that business performance is unfavourable fell to 6% (18% last

year). This improvement produced a very significant positive overall balance,

ranking as the second best result since the data series began.

Q1 sales prices experienced a significant increase, rising from a slightly

negative balance in 1Q15 and 4Q15, to a positive balance standing at 30. This

upward trend is due to a fall in negative responses (lower prices) by more than half

from 19% in Q1 2015 to 7% in Q1 2016, and a two-fold increase in positive

answers (rises in prices) from 18% to 36% in the same period.

However, employment fell slightly, as the percentage of business executives

indicating a rise in employment fell significantly (28% in Q1 2015 to 19% in Q1

2016).

The hospitality sector in the AMB registered much better results when compared

to the whole of Catalonia on all variables. This may be due, as mentioned, to the


May 2016


15

benefits that this sector felt from hosting the eleventh edition of the Mobile World

Congress at Fira de Barcelona. This latest edition, held from 22 to 25 February, was

the most successful ever with 100,000 delegates, an economic impact of 460

million Euros and more than 13,000 temporary workers taken on in Barcelona and

the Metropolitan Area. Added to this is the fact that tourism is less seasonal in the

city of Barcelona -and by extension the AMB- than the rest of Catalonia.

Table 6. Business climate in the hospitality sector

Hospitality


Quarter IV

2014 Quarter III

2015

Quarter IV

2015



Favourable 39 49 65

Normal 44 42 29

Unfavourable 18 8 6

Balance 21 41 59

Sales prices

Increase 18 20 36

The same 63 59 57

Decrease 19 21 7

Balance -1 -2 30

Number of workers

Increase 28 17 19

The same 66 48 76

Decrease 6 35 5

Balance 22 -19 14


Figure 9. Trend in hospitality sector in the AMB and Catalonia, 1Q 2016 (Balance in %)

59

30

14

31

14

4

0

10

20

30

40

50

60

70


AMB Catalona


May 2016


16


2.6. Other services

Business performance in the ‘other services’ sector in the first quarter of 2016,

was positive, continuing a positive trend that began in early 2015. However, sales

prices and employment are down slightly from the previous quarter.

Regarding business performance, improvements on the previous quarter

resulted in a positive overall balance that was up by one point. This is because the

percentage of negative responses went down (business performance was

unfavourable), from 14% in 4Q15 to 12% in 1Q16, while positive responses

remained practically unchanged: 25% and 24%, respectively. It should be

mentioned that the overall balance is very similar to what was seen throughout the

quarters of 2015.

The falls in sales prices remained practically stable compared to the previous

quarter, with the number of positive responses (price increases) increasing in the

same proportion as the negative responses (falls in prices). As such it achieved the

second best result in the data series (after that of Q4 2015).

The overall balance in terms of employment is slightly less positive in Q1 2016

than the previous quarter, pointing to a gradual slowdown. This trend in overall

results is due to a reduction in the number of positive responses (increases in

employment) from 19% in Q4 to 17% in Q1, as the percentage of negative

responses (decreases in employment) remained virtually the same, down just one

percentage point compared to Q4 2015 (from 13% to 12%, respectively).

‘Other services’ results were slightly better for the whole of Catalonia in all

areas (business performance, sales prices and employment) in the first quarter of

2016.


May 2016


17

Table 7. Business climate for the ‘other services’ sector

Other services


Quarter I

2015

Quarter IV

2015

Quarter I

2016



Favourable 26 25 24

Normal 60 61 64


Balance 13 11 12

Sales prices

Increase 5 3 5

The same 79 88 84

Decrease 15 9 11

Balance -10 -5 -6

Number of workers

Increase 14 19 17

The same 67 68 71

Decrease 19 13 12

Balance -6 7 5



May 2016


18

Figure 8. Trends in ‘other services’ in the AMB and Catalonia, first quarter

2016 (Balance in %)


3. Outlook for business performance in the Metropolitan Area of Barcelona

and its sectors

Business executives’ forecasts for the second quarter are the most

positive since 2010, along with those made a year ago

Business executives are forecasting that the AMB’s business performance will

be positive in Q2 2016, improving on the result seen in the previous quarter,

maintaining the previous year’s result. This is due to an increase in the percentage

of business people in the AMB that expect business performance to be favourable

(22% in Q1 to 28% in Q2), while the percentage that believe this indicator will be

unfavourable decreases (from 16% to 11%). It’s worth mentioning that during the

first quarter of 2016 the Catalan economy began a deceleration process, despite

growth rates remaining high –and rates were higher than those in Spain and

especially those seen in the European Union. This marks a turning point in the

recovery process that began in mid-2013 and reached its peak in the fourth quarter

of 2015. The main reasons for this lack of growth is a slowdown in the drivers

pushing the economy forward and a worsening economic condition worldwide.

However, a recovery in consumption and investment and job creation are still

playing a fundamental role in the economic recovery of the Catalan economy and

this is keeping business and consumer confidence high.

12

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10

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4

-8

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2

4

6

8

10

12

14


AMB Catalonia


May 2016


19

Figure 11. Business performance outlook for the AMB and Catalonia

(Balance in %)


The outlook for business performance in the AMB is slightly more positive than

for the whole of Catalonia, since the percentage of executives that are forecasting

an unfavourable performance is slightly higher in Catalonia than in the AMB (12%

and 11%, respectively). In both cases there is an improvement in terms of business

outlook compared to the previous quarter, as shown in the last graph.

The outlook is positive in terms of sectors, keeping up the optimistic

tone witnessed in 2015

Regarding results per sector, the outlook for Q2 is positive across all sectors

analysed in the Business Climate Survey. Furthermore, these forecasts are up on

the previous quarter and these are very similar to those seen a year ago for all

sectors, except in the construction sector, which is now significantly higher. A

special mention goes to the hospitality sector which enjoys the best outlook since

the start of the data series, and the construction sector achieves a positive overall

balance for the second consecutive quarter.

6

17

3

16

0

5

10

15

20

I.16 II.16

AMB Catalonia


May 2016


20

Figure 12. Outlook for business performance in the AMB and its sectors (Balances in %)


Indeed, the hospitality sector’s business performance registered the best

outlook since Q1 2011 and it was the most positive of all the sectors analysed for

the second quarter of 2016. Thus, almost half of business people in this sector are

forecasting favourable business performance in 2T (47%), compared to only 2% of

executives saying it will be unfavourable.

Retail, industry and ‘other services’ sectors have the second best results

with positive overall balances (about 15%) and these follow a similar trend. Thus,

all three sectors recorded a small reduction in their overall balances with respect to

the outlook seen a year ago (around 2-3 percentage points). However, the overall

balance for these sectors is better than the previous quarter by 7-8 percentage,

because the percentage of business people forecasting an unfavourable outlook

increases, while the percentage that expect it to be unfavourable in all three

sectors falls.

The outlook for the construction sector is slightly positive for Q2. In fact, it is

the second best semester with a positive overall balance since the beginning of the

data series, second only to Q4 in 2015. The construction sector recorded 21% of

business people indicating a favourable business performance outlook compared to

20% forecasting an unfavourable forecast.

19

-15

19

41

17 1716

1

16

45

1517

-20

-10

0

10

20

30

40

50


II Q 2015 II Q 2016


May 2016


21

Table 8. Business performance outlook for the AMB and its sectors

Metropolitan Area of Barcelona Percentage of businesses

Quarter II 2015

Quarter I 2016

Quarter II 2016

Outlook compared to the last quarter

Metropolitan Area of Barcelona4



Industry



Construction


Unfavourable 28 18 20 Balance -15 3 1

Retail



Hospitality


Unfavourable 4 24 2 Balance 41 -8 45

Other services




4. Outlook for the main business variables in the Metropolitan Area of



Business executives are predicting stabilisation in sales prices in the

second quarter, as happened a year ago

AMB employers are predicting a stabilisation of sales prices in the second

quarter of 2016, as happened in 2015. In terms of figures, 6% of business people

in the AMB expect a rise in prices, exactly the same percentage that forecast a

decline in prices.

4 Barcelona’s Chamber of Commerce produces these results for the whole of the Metropolitan Area of Barcelona based on weighted data for each sector in Catalonia over the whole sector in the Catalan economy in terms of gross value added (GVA). There is no direct data for the AMB.


May 2016


22

Figure 13. Outlook for sales prices in the AMB (Balance in %)


In terms of results per sectors, there are major differences in the forecasts on sales price. Firstly, hospitality, construction and the industrial sectors are forecasting an increase in sales prices, though by different magnitudes and in totally opposite directions compared to a year ago. The hospitality sector is expected to see the highest increases in prices, but not by as much as a year ago. Afterwards comes the construction sector with a slight increase in prices, which is something that hasn’t been forecast since the beginning of the data series. The industrial sector’s outlook shows a slight increase in sales prices for Q2 by about the same amount as a year ago. And on the other hand, retail and ‘other services’ are forecast to see falling sales prices, although this is slowing compared to the forecasts seen in Q2 2015, with both sectors showing more stability.

The forecast by businesses for employment in Q2 is positive, but worse than last year

The amount of business people predicting that employment will grow in the

second quarter in the Metropolitan Area of Barcelona is higher than forecasts

predicting a fall (11% and 8%, respectively). However, these expectations are

lower than those seen a year ago, but higher than the previous quarter.

2

-9

-4

37

-6

-1

2

7

-1

25

-4

1

-20

0

20

40


II Q 2015 II Q 2016


May 2016


23

Figure 14. Outlook for sales prices in the AMB (Balance in %)


In terms of sectors, we can see an overall decline when compared to the year

previous, and if we compare with last quarter only the hospitality, retail and ‘other

services’ sectors show an improvement, but we should remember that seasonality

has played an important role in the first two sectors mentioned.

Table 9. Business outlook for the Metropolitan Area of Barcelona

Metropolitan Area of Barcelona


Quarter II

2015

Quarter I

2016

Quarter II

2016





Sales prices

Increase 7 11 6 The same 86 80 88 Decrease 8 9 6 Balance -1 1 0

Number of workers

Increase 15 11 11 The same 77 78 81 Decrease 8 11 8 Balance 7 0 3


4.2. Industry

The industrial sector has a positive forecast across all variables analysed, but

these forecasts are more pessimistic than during the same quarter last year.

2

-9

5

44

6 7

2

-13

2

17

4 3

-20

0

20

40

60


II Q. 2015 II Q. 2016


May 2016


24

Specifically, with respect to business performance, 28% of executives predict

a favourable outlook in the second quarter, exceeding the percentage indicating an

unfavourable outlook, standing at 11%. This positive overall balance is lower than

last year’s results, but forecasts are the second highest in the last five years.

Forecasts by executives in the industrial sector about exports for the second

quarter of 2016 are also positive but lower compared to the previous quarters, and

a year ago. 13% of businesses expect that this will grow, while only 6% expect it to

decrease.

The outlook for sales prices are positive, but stable compared to the same

period of 2015. This is because the percentages were exactly the same and there

has been no change. In relation to the previous quarter, the outlook is slightly

brighter.

The outlook for employment in Q2 is positive, with the percentage of business

people expecting this to increase higher than the percentage expecting a fall (8%

and 5%, respectively). However, the overall balance is lower than the outlook seen

the previous year, but slightly higher than in Q1 in 2016.

Table 10. Business outlook in the industrial sector Industry


Quarter II

any 2015

Quarter I

any 2016

Quarter II

2016





Exports


Sales prices


Number of workers



Industrialists have a more positive outlook in Catalonia as a whole compared to

the AMB, mainly because of exports. The only aspect that was in the AMB’s favour


May 2016


25

was sales prices, with the overall balance being positive in the AMB and negative in

Catalonia.

Figure 15. Outlook for the industrial sector in the AMB and Catalonia, 2T. 2016 (Balance in %)


4.3. Construction

The business outlook for the second quarter in the construction sector has two

sides to it: one which is positive, showing an improvement on results seen a year

ago in terms of business performance and sales prices, yet another which is

negative with poorer results in terms of employment, registering the worst results

of any sector.

The forecasts of business people regarding business performance for 2Q are

slightly positive for the second time since the start of the data series. Specifically,

21% of employers expect that performance will be unfavourable compared to 20%

who forecast a favourable trend, with percentages slightly worse than the best

overall balance in the data series (in Q4 of 2015).

On the other hand, the outlook for sales prices for Q2 are more positive than

for Q1, going from a zero overall balance to +7. Thus, the percentage of business

people in the construction sector that forecast an increase in Q2 prices rose at a

higher rate than the percentage that expect a fall in prices (12% and 5%,

respectively).

16

7

2 2

21

15

-3

3

-5

0

5

10

15

20

25

Business performance Exports Sales prices Employment

AMB Catalonia


May 2016


26

The outlook for employment in Q2 shows a negative trend. The percentage of

business people in the construction sector that forecast an increase in employee

numbers decreases slightly to 4% (before 5%), while the percentage indicating a

fall in fact rose to 17% (compared to 9% the previous quarter). Therefore, the

forecast is that there will be a decrease in employment.

Businesses’ negative outlook in terms of employment for the second quarter in

the AMB is even worse when we look at Catalonia as a whole. Sales price forecasts

are also lower in Catalonia, and the forecast for business performance is the same

in Catalonia and the AMB.

Table 11. Business outlook in the construction sector

Construction


Quarter II

2015

Quarter I

2016

Quarter II

2016



Favourable 13 21 21

Normal 60 62 59


Balance -15 3 1

Sales prices

Increase 1 4 12

The same 90 92 82

Decrease 10 4 5

Balance -9 0 7

Number of workers

Increase 5 5 4

The same 82 86 79

Decrease 14 9 17

Balance -9 -4 -13



May 2016


27

Figure 16. Outlook for the construction sector in the AMB and Catalonia, 2T.2016 (Balance in %)


4.4. Retail

The outlook for retail in the second quarter is positive in terms of business

performance and employment, but sales prices remain at a similar level, with a

slight improvement compared to the previous quarter, but not compared to the

situation a year ago.

With respect to business performance, the increase in the percentage of

business people in the retail sector forecasting a favourable trend rose to 28% in

Q2 (24% the previous quarter), while the percentage of businesses indicating an

unfavourable trend dropped to 12% (compared to 15% in Q1). The overall balance

is very positive and in line with 2015’s outlook.

Sales price forecasts indicate there will be a small drop in prices in the second

quarter compared to the previous quarter, when the outlook was for price stability.

The percentage of employers in the retail sector that expect sales prices to rise in

fact gets smaller, but by a smaller percentage than those that expect prices will

decline (7% and 8%, respectively).

1

7

-13

10

-7

-15

-10

-5

0

5

10


AMB Catalonia


May 2016


28

However, the outlook for employment improved, and it is now positive in Q2.

10% of business people expect that employment will increase in the second quarter

(exactly the same percentage as the previous quarter), compared to 8% who

expect it to decrease (percentage decreases compared to the 11% recorded in the

previous quarter).

Table 12. Business outlook for the retail sector

Retail


Quarter II

2015

Quarter I

2016

Quarter II

2016





Sales prices


Number of workers

Increase 11 10 10 The same 83 79 82 Decrease 6 11 8 Balance 5 -1 2


The outlook for business performance in the retail sector in the second quarter

of 2016 is better in Catalonia as a whole than in the AMB, with the former being

slightly more positive in terms of employment and sales prices (these had a

negative overall balance). The outlook on business performance is the same for

both geographical areas.

Figure 17. Outlook for the retail sector in the AMB and Catalonia 2T. 2016

(Balance in %)


16

-1

2

16

1

5

-5

0

5

10

15

20


AMB Catalonia


May 2016


29

4.5. Hospitality

Hospitality is the sector with the best business outlook for the second quarter,

notably with positive balances for all variables analysed. However, these forecasts

were not as high as for the same quarter the previous year in terms of sales prices

and employment.

The outlook for business performance in the second quarter is very positive,

mainly due to the fact that this coincides with the beginning of the summer season

and tourism in general is enjoying very good results. Thus, 47% of business people

expect business performance will be favourable, well above the 2% who expected it

to be unfavourable. This result improves on last year’s (45% and 4%, respectively),

making it the best outlook since the data series began.

Given this very favourable situation in Q2, the sector is expecting sales prices to

rise. This is what 29% of business people in the hospitality sector expect, clearly

exceeding the 4% indicating it will decrease.

Furthermore, the sector is expecting to create employment in the second

quarter: 19% of employers forecast an increase of workers, compared to 2% who

expected this to drop. However, the overall balance is less positive than a year ago,

when these percentages were 46% and 1%, respectively.

Table 13. Business outlook in the hospitality sector Hospitality


Quarter II

2015

Quarter I

2016

Quarter II

2016


Favourable 45 16 47

Normal 51 61 50

Unfavourable 4 24 2

Sales prices

Balance 41 -8 45

The same 58 80 66

Decrease 2 13 4

Balance 37 -7 25

Number of workers

Increase 46 1 19

The same 53 75 80

Decrease 1 24 2

Balance 44 -23 17



May 2016


30

Business performance and sales prices in the hospitality sector are expected to

be more favourable in the AMB than the whole of Catalonia, very likely because this

sector is highly concentrated in the metropolitan area, especially in the city of

Barcelona. However, employment forecasts are slightly higher in Catalonia than the

AMB.

Figure 18. Outlook for the hospitality sector in the AMB and Catalonia

2T.2016 (Balance in %)


4.6. Other services

For ‘other services’ the prospects are positive, except for sales prices. These

forecasts are in line with the outlook a year ago, but compared to the previous

quarter, these are more favourable and positive in terms of business performance

and employment, while sales prices worsen (turning in negative number).

Regarding business performance, the outlook remains quite favourable. 25%

of business people in this sector expect business performance to be favourable in

Q2, a higher percentage than that expecting business performance to be

unfavourable (10%), which means the overall balance is only two percentage points

lower than that of Q2 in 2015 (which was the best result since 2010).

On the other hand, the business outlook for sales prices is worse and these

are again slightly negative. The percentage of business people forecasting prices

45

25

17

33

20 21

0

10

20

30

40

50


AMB Catalonia


May 2016


31

will decrease dropped to 5% (7% in the previous quarter), while the percentage

expecting prices to rise in fact decreases by a larger amount to 1% (compared to

11% in 1T).

The outlook for employment and business performance also improved

significantly with an increase in the overall balance in the second quarter. 11% of

employers expected this would rise, a percentage that is higher than the 8% that

expected it will fall, giving an overall positive outlook balance.

Table 14. Business outlook for the ‘other services’ sector

Other services


Quarter II

2015

Quarter I

2016

Quarter II

2016





Sales prices


Number of workers



The outlook for the Metropolitan Area of Barcelona in the second quarter is

worse for sales prices and employment than Catalonia as a whole, but a little

better in terms of business performance.

Figure 19. Outlook for ‘other services’ sector in the AMB and Catalonia

2T.2016 (Balance in %)


15

-4

4

14

-3

5

-10

-5

0

5

10

15

20


AMB Catalonia


May 2016


32

5. Technical information

Table 15. Sample error. Metropolitan Area of Barcelona.

First quarter 2016

Sectors Sample Error5

Industry 177 7.4% Construction 94 10.1% Retail 247 6.2% Hospitality 101 9.8% Other services 559 4.1% TOTAL 1178 2.9%


6. Methodology

Since 2012, the Business Climate Survey of Catalonia broadened its reach in

terms of sectors considered to be consistent with INE data for the whole of Spain,

which the agency started to use in January, 2012.

These changes are mainly related to:

Broadening the industrial sector to include the whole sector, because so

far it only considered manufacturing industry.

Broadening the construction sector to include the whole sector. This

means including specialised construction activities, which were previously

not contemplated.

Broadening the retail sector. Until now this only contemplated retail

trade, but it now also includes the wholesale trade and the sale and repair

of vehicles.

Broadening the sector related to tourism. So far, it only included the hotel

industry, but this now includes eateries (food and beverage services)

Broadening the services sector in order to contemplate almost all the

sector. So this is now called ‘other services’.

5 Maximum possible error calculated from a simple random sample


May 2016


33

Therefore, the sector categories6 after 2012 are:

Industry 01: Food, beverages and tobacco (CCAE-2009: 10 to 12) 02: Textiles, clothing, leather and footwear (CCAE-2009: 13 to 15) 03: Wood and cork, paper and printing industries (CCAE-2009: 16 to 18) 04: Chemical, rubber and other non-metal minerals industries (CCAE-2009: 20 to 23) 05: Metallurgy and manufacturing of metal products (CCAE-2009: 24 and 25) 06: Manufacture of machinery and mechanical equipment, and electrical products, computers, electronic and optical products (CCAE-2009: 26 to 28) 07 Other industries (CCAE-2009: 05 09 to 19, 29 to 33, 35 to 39) Construction Section F of the CCAE-2009 is considered completely, with divisions: 41: Construction of buildings 42: Construction of civil engineering works 43: Specialised construction activities Retail 01: Retail trade of food products, beverages and tobacco specialized (CCAE-2009: 472) 02: Retail trade of household goods, cultural and recreational goods in specialised shops (CCAE-2009: 475 and 476) 03: Other types of retail (CCAE-2009: 473, 474, 477, 478, 479) 04: Retail in non-specialized shops (CCAE-2009: 471) 05: Sale and repair of motor vehicles and motorcycles (CCAE-2009: 45) 06: Wholesale trading and intermediary trading (CCAE-2009: 46) Hospitality CCAE-2009: 55 and 56 55: Accommodation Services 56: Food and Beverage Services Other services 01: Information and communication (CCAE-2009: 58 to 63) 02: Legal and accounting activities (CCAE-2009: 69) 03: R&D, advertising and market research and scientific and technical activities (CCAE-2009: 71 to 75) 04: Administrative and support service activities (CCAE-2009: 77 to 82) 05: Other Services (CCAE-2009: 49 53, 64 66, 68, 92, 93 and 96)

For more information on methodology, see: http://www.ine.es/metodologia/t37/t3730199.htm

6 The new methodology used for sector categories in the Business Climate Survey for industry and construction allows a comparison with the survey results for previous quarters in 2012, but not in the ‘other sectors’ sector.

Government & Nonprofit

Business Climate in the Metropolitan Area of Barcelona