Spain industrial output growth picks up to five-month high

Industrial production in Spain increased by 1.7% year-on-year in May 2025, accelerating from a 0.6% gain in April and marking the strongest annual growth since December 2024. The improvement suggests that Spain’s industrial sector is regaining momentum, supported by firmer domestic demand and a gradual stabilization in broader Eurozone manufacturing conditions.

The rebound was broad-based across major industrial segments, with output of consumer goods rising by 2.5%, compared to 1.3% in April. This uptick reflects strengthening retail and household demand, bolstered by improved consumer confidence and modest wage growth. In particular, the non-durable goods segment, such as food, clothing, and household products, showed notable gains.

Capital goods production grew by 1.5%, up from 0.9% in the previous month, indicating renewed investment in machinery and equipment, possibly driven by government incentives and EU recovery fund disbursements aimed at modernizing industrial infrastructure and supporting green transition initiatives.

Meanwhile, energy output jumped by 2.2%, compared to 0.8% in April, reflecting both higher electricity generation and increased activity in renewables. This gain comes amid efforts to expand clean energy production and improve energy security in response to shifting European energy dynamics.

Despite the encouraging annual figures, monthly performance remained subdued. On a seasonally adjusted month-over-month basis, industrial output declined by 0.6% in May, following a 0.8% contraction in April. The back-to-back monthly declines suggest that short-term volatility remains, possibly linked to external headwinds such as geopolitical tensions, global supply chain adjustments, and cautious inventory management by firms facing uncertain demand forecasts.

Still, the broader trend points to gradual improvement, with Spain’s industrial sector showing more resilience than some of its larger Eurozone peers. Benefiting from a relatively diversified industrial base, ongoing digitalization efforts, and expanding export channels beyond the EU, Spanish industry appears poised for moderate expansion in the second half of the year.

Looking ahead, industrial sentiment surveys, export orders, and input cost trends will be closely watched for indications of whether this momentum can be sustained. Continued support from EU structural funds, as well as greater alignment with sustainability-driven industrial policy, may further bolster production capacity and competitiveness.

In summary, while monthly figures reflect lingering near-term pressures, the robust annual growth in May signals that Spain’s industrial recovery remains on track, supported by rising demand across key sectors and a favorable policy environment.