Spain’s calendar-adjusted industrial output rose by 0.3% year on year in January. The result was below the expected 1.7%.
The release compares actual output growth with a market forecast for the same period. The difference between the two figures is 1.4 percentage points.
The data point refers to industrial production and is adjusted to remove calendar effects. It describes year-on-year change for January.
The weak industrial output data from Spain, showing just 0.3% growth instead of the expected 1.7%, is a clear signal of a potential economic slowdown. We should view this as a leading indicator of weakening corporate earnings for Spanish companies. This might lead us to consider bearish positions on the IBEX 35 index over the next few weeks.
This isn’t a one-off figure, as it aligns with the recent HCOB Manufacturing PMI for Spain, which fell to 49.5 in February, technically showing a contraction. With Eurozone core inflation remaining sticky at 2.8%, the European Central Bank has little room to stimulate the economy without risking higher prices. This combination of slowing growth and persistent inflation creates a challenging environment for equities.
Looking back, we remember the industrial sector showing signs of a rebound in the latter half of 2025, which helped fuel market optimism at the time. The current data for early 2026 breaks this positive trend, suggesting the recovery has lost its momentum. This shift in narrative could catch some market participants off guard.
In response, we could look at buying put options on the IBEX 35 to protect our portfolios or to speculate on a further downturn. Another conservative strategy would be to sell out-of-the-money call options against existing Spanish stock holdings to generate income. These positions offer a buffer if the market trades sideways or declines moderately.
This weakness could also spill over into the currency markets, putting downward pressure on the EUR/USD pair. The uncertainty generated by this data suggests an uptick in market volatility is likely. Therefore, we might see value in purchasing options on the VSTOXX index, which tracks Euro Stoxx 50 volatility.
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