The purchasing power of families is shrinking, and investment in the business sector is slowed once again. In September, production in the Valencian Community fell by 6.1 percent year over year, compared with a 4.9 percent drop in August. This marks the sixth consecutive downturn in the indicator produced jointly by INE and the Valencian Institute of Statistics to monitor the region’s industrial activity.
The decline in the manufacturing sector was broad, with a year-on-year drop of 29 percent in September. The persistent weakness adds to declines seen in previous months and has led to producers in locations like Vinalopó and other regional centers to reduce activity. Shoes production in particular was down about 17.5 percent compared with 2022.
Final export figures also reflected a downturn: exports fell by 11 percent, driven by a drop in European demand amid inflation and reduced household purchasing power. Analysts also note that favorable autumn weather delayed some sales, and as Avecal indicated, the coming winter season is ending a period of high spare orders. This could lead to further disruptions in the next months if inventories are not reduced.
The textile sector faced similar pressures. After a strong recovery post-pandemic, production is now slipping for a full year. In September the sector fell by 12.3 percent, bringing the year-to-date decline to 9.6 percent. A textile factory photo caption and credits appear below.
Industry leaders warn that families must allocate more of their budget to housing costs and essential shopping, which weighs on overall consumption across Europe. Yet, there is optimism that retail sales will pick up in the second half of the year, allowing a modest increase in overall figures. Industry representatives highlight that, so far, the sector has avoided large-scale layoffs, although this remains a risk if the trend persists.
The economic climate and new regulations have created a challenging environment for textiles in the Valencian Community. The tile sector registered a 19.6 percent drop in September and a 17.9 percent decrease over the first nine months of the year. The rise in gas costs, driven by tensions from the Ukraine war, has squeezed margins for tile producers. This energy shock is an ongoing concern for many firms operating in this subsector.
The metallurgy sector presents a mixed picture. Metal product manufacturing showed resilience, with a modest 0.5 percent fall in September and a 2.4 percent decline for the year to date. In contrast, machinery and capital goods manufacturing fell more sharply, by 12.4 percent in September and 18.1 percent for the year overall. The data point to slower business investment as firms pause projects while awaiting clearer economic signals. Financing activity mirrors this trend, with sustained demand for short-term funds but a reduction in long-term financing.
On the brighter side, some sectors posted gains. Food production declined by less than 1 percent for the year, and the energy and water sectors grew by 0.3 percent in September. Electrical and computer equipment manufacturing continued to post robust growth, rising 10.2 percent in September and 36.7 percent over the year to date.
The regional view highlights mixed performance across autonomous communities. In September, industrial output rose in the Canary Islands by 2.6 percent and in Castile and León by 0.2 percent. The Balearic Islands, however, faced a sharp contraction of 13.5 percent in factory activity for the month. Rioja registered an 11.3 percent decline, Cantabria 9.5 percent, and Murcia 8.9 percent, while the Valencian Community remained down by 6.1 percent in September. [Source: INE and Valencian Institute of Statistics]