Portugal: Economy remains deeply mired in recession
August 30, 2011
Economic activity remains sluggish at the outset of the third quarter with a majority of indicators pointing downwards. In July, industrial output declined 3.0% over the previous month (-4.5% year-on-year), while business confidence deteriorated further from minus 10.3 points in July to minus 16.6 points in August. Moreover, the 3-month moving average of the economic climate indicator continued the downward trend in place since July 2010, inching down from minus 2.3 points in July to minus 2.4 points in August. The deterioration in business confidence does not bode well for a rebound in the industrial sector in the third quarter, after GDP remained flat in the three months to June, according to the preliminary report. Meanwhile, retail sales expanded 2.5% month-on-month in July (-5.5% yoy), which represented the second consecutive positive reading and added a positive note to July's figures. Consumer confidence stepped up slightly from minus 49.4 points in July to minus 49.1 points in August. The August reading reflected an improvement in virtually all components of the survey, while the component relative to economic perspectives worsened.