Spain's economy expands 2.6% in second quarter driven by household spending and construction

Year-on-year growth, however, stood at 2.6%, according to INE (national institute of statistics) data on Thursday, which revises the figure down by 0.1% compared with the preliminary estimate in July.

Spain has nevertheless recorded 24 consecutive quarters of growth with positive rates. Household demand, investment and the construction sector have driven growth of 2.6%, in line with the government's forecasts for 2026, as well as those of international organisations.

Although the crisis triggered by the conflict in the Middle East has slowed growth in many major economies, household demand has not slowed down in Spain. In fact, it accounts for a large part of the growth, having contributed 1.1% to quarter-on-quarter growth in GDP between April and June. On a year-on-year basis, household demand accelerated to 3.5%, while public sector demand also rose by 2.6%.

The bad news was external demand, which has shaved almost 1% off year-on-year growth and 0.5% off quarter-on-quarter growth.

Investment did show a notable performance during the period, with gross fixed capital formation rising by 5% year-on-year, 0.8% more than in the previous quarter.

By sector, the steady growth in gross value in the construction sector is particularly noteworthy, having risen by 4.3% year-on-year. From April to June, it rose by 1.4%. The services sector saw its output rise by 2.9% year-on-year, also contributing to economic growth.

At the same time, the strength of the labour market underpinned household demand. Both the number of hours actually worked (2.8%) and the creation of full-time equivalent jobs (2.2%) recorded positive figures in the second quarter.

The biggest growth, however, was in household incomes, which drive domestic demand: wages and salaries rose by 7% year-on-year, with a 3% increase in the number of full-time equivalent jobs and a 3.9% rise in average pay per full-time equivalent job.

The Ministry of Economy has stated that quarterly GDP growth in the first quarter was underpinned by the "strength" of domestic demand and that household demand was driven by the "robustness of the labour market". It also highlighted the "dynamism" of investment, particularly that relating to intellectual property products.

"Spain continues to lead the way among the major advanced economies, according to the latest forecasts from the leading international organisations, against a backdrop still marked by international uncertainty," ministry sources stated.

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