60% of companies report rising uncertainty about economic policy, and this volatility is now shaping operations and strategic decisions in the current fourth quarter. The surge in political risk has become a measurable factor, following a downturn in the prior quarter, and is cited as a significant burden by nearly half of surveyed firms. The latest Bank of Spain Business Activity Survey (EBAE) highlights that policy ambiguity is weighing on the pace of activity as firms adjust planning, pricing, and investment timelines in response to potential regulatory shifts and fiscal commitments. The intention to hold general elections on 23 June is repeatedly mentioned as a driver of concern among businesses across multiple sectors.
EBAE is a quarterly tool used by the Bank of Spain to capture real-time indicators of business activity, including turnover, employment, input costs, and the prices charged and paid by firms. The fourth quarter fieldwork ran from 13 to 27 November, based on an online questionnaire completed by a sample of 15,000 companies, of which 6,240 provided valid responses. While the Bank notes the survey period, data collection faced notable reluctance from certain business representatives during the period of data gathering, amid broader political negotiations involving national and regional actors that influenced market sentiment.
Labor market frictions and workforce availability continue to present a challenge, contributing to slower activity. About 42.5% of respondents flagged workforce constraints as a negative influence, a rise of nearly 4 percentage points from the previous quarter. The survey confirms that these issues persist, with sectors such as hospitality, agriculture, and construction showing particular vulnerability. More than half of respondents in these sectors report adverse effects, signaling that wage pressures and hiring frictions are likely to persist into coming quarters as demand evolves and adjustment costs accumulate.
Energy costs remain a burden for a majority of firms, with 59% identifying this factor as an overhead pressure. The percentage is modestly lower than the prior quarter, reflecting a easing trend in some energy markets and a partial pass-through to consumer prices in certain industries. Yet, energy expenditure continues to weigh on margins, prompting firms to reassess cost structures and efficiency drives across supply chains.
Inflationary pressures are still visible across the quarter, as firms report higher production costs alongside increased selling prices. The data suggest a modest net tilt toward cost expansion, with expectations of a marginal improvement in the next year as input costs stabilize and demand patterns normalize. Managers anticipate a gradual rebound in activity, although this comes with ongoing caution given policy uncertainties and external shocks that could alter trading conditions.
In the fourth quarter, 25.3% of companies increased their prices relative to the previous quarter, a rate slightly below the 26.4% observed in the third quarter. Outlooks for early 2024 point to potential recovery, though economists warn that calendar effects may be at play, with price adjustments commonly clustered at the start of the year. Across sectors, price dynamics vary, with information and communication services, transport, administrative services, and leisure activities showing stronger price adjustment momentum as firms align pricing with evolving demand and input costs.