In May 2024

Regional economy grew at a slower pace

The Regional Economic Activity Indicator (RIEA) reveals that in May 2024, the regional economic activity maintained a positive growth trajectory, although at a slower pace than in the previous month.

As previously mentioned, the primary purpose of the RIEA, as indicated by the DREM in its initial release in October 2017, is to "signal the behaviour of economic activity, particularly with regard to its direction and magnitude of fluctuations: whether it is in a positive or negative trend, accelerations, decelerations, and identifying turning points." Therefore, its quantitative value assumes secondary importance, as it is not intended to substitute for the actual change of the Gross Domestic Product, which is determined through a broader and more comprehensive set of statistical data, even though a strong correlation exists between the two variables.

Economic Overview for May 2024 - 7 Key Themes

DREM provides a concise analysis of the main short-term indicators, divided into themes, noting that many of the changes mentioned are in three-month moving averages, a common technique in economic bulletins to smooth out irregularities and highlight trends.

Economic Activity

As mentioned earlier, in May 2024, the regional economic activity maintained a positive growth trajectory, though at a slower pace compared to the previous month.

The performance of the tourism sector contributed to economic growth, as overnight stays (excluding local accommodations with fewer than 10 beds) increased by 3.9% in May, surpassing the 3.5% growth recorded in April. Notably, total revenues in tourist accommodations saw a 14.8% increase (up from 11.9% last April).

Electricity distribution, often associated with economic growth, rose by 2.9% in May 2024, down from 3.2% in the previous month. Diesel consumption decreased by 0.4%, following a 2.2% growth last April.

Analysing the ratio of incorporated to dissolved companies, it is observed that in May 2024, 3.3 new companies were incorporated for each dissolved company in the Region, a higher proportion than in the previous month (3.0).

Qualitative Indicators

The confidence indicators available for May 2024, compared to the previous month, show an increase in the manufacturing industry, trade and services sectors, while a decline was noted in the construction and public works sector.

Private Consumption

One of the indicators revealing the evolution of private consumption refers to SIBS network operations with cards issued by national banks, which showed a 6.2% increase in total ATM withdrawals and purchases made through automatic payment terminals with national cards in May 2024, lower than the 7.4% growth in April.

Gasoline consumption decelerated, with a year-over-year increase of 7.7% in May 2024 (compared to 10.9% last April). Meanwhile, new passenger car purchases by residents decreased by 16.4% (-15.3% in the previous month). The balance of consumer loans granted to households and non-profit institutions serving households fell by 13.2% in May 2024, following a 13.3% decrease in the previous month.

Investment

Regarding investment, the indicators for May 2024 are divided into two groups: those showing a positive signal, such as the sales of light commercial vehicles (24.0%; 9.8% in the previous April), housing bank appraisals (17.0%; 17.8% in the last month), building permits (9.1%; 22.2% in the previous month), and cement sales (6.3%; 7.8% in the previous April); and those in decline, such as the balance of loans granted to households for housing (-0.4%; -0.7% in the previous April) and the balance of loans granted to non-financial companies (-7.8%; -7.7% in April 2024).

External Demand

Despite trade with foreign countries representing only a small portion of the overall trade conducted by the Region (most of which is with the mainland), it is important to note that exports (-4.5%; -2.5% in the previous April) decreased, while imports of goods (1.7%; -3.0% in the previous month) increased. The movement of goods in the ports (-2.6%; 3.5% in the previous month), which is a more comprehensive indicator of foreign trade dynamics, slowed compared to the previous month. In other indicators, in May 2024, the acceleration in passenger traffic at airports (4.9%; 3.6% in the previous April) is in line with the trend in the total of cash withdrawals from ATMs and purchases through automatic payment terminals with international cards (14.2%; 12.5% in the previous month).

Labour Market

Data from employment agencies in the Country and the Region indicate reductions in job offers (-27.7%), job applications (-1.4%), and the number of registered unemployed during the month (-2.0%), in May 2024.

Prices

In May 2024, the annual inflation rate, which stood at 3.9%, accelerated compared to the previous month (3.0%), being lower for Goods (2.3%) and higher for Services (6.0%). The underlying inflation rate (excluding unprocessed food and energy products) was 4.1%.

For more information, visit:

• RIEA - In Focus (Portuguese only)

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