In Spain, as in the euro area, the deterioration in these qualitative indicators has been comparatively more pronounced in the case of manufacturing than in that of services. The quantitative indicators, which in principle tend to be more closely related to activity, have also tended to show less favourable behaviour in manufacturing than in services. This mixed behaviour across sectors, and developments coinciding with the timing of the global trade tensions between the United States and China are consistent with the shocks observed since the beginning of 2018, which appear to have had a more pronounced impact on manufacturing, being external in origin; from the viewpoint of demand, manufactures are typically more closely linked to exports than are services. In addition, the regulatory changes in the car industry sector, which came into force after the summer of 2018, have also contributed to explaining the weakness of exports and of manufacturing as a whole, while services, a much smaller proportion of whose value-added is exported, have shown greater resilience. One area in which the slowdown in activity has made itself plain is the labour market. This is a reason for concern, given that the rate of unemployment in the Spanish economy is still high, something that I shall refer to later in greater detail. In particular, Social Security registrations have lost significant momentum since the beginning of the year, growing in September at a year-on-year rate of 2.4%, as against 3.1% at the end of 2018.
Having said that, while these gains have so far been based mainly on the moderation of labour and financial costs, in the future they will have to come increasingly from genuine increases in productivity. Long-term growth of the Spanish economy: the challenge of productivity The productivity challenge  The timid gains in productivity seen in the past recession and subsequent recovery proved to be insufficient to close the gap separating us from the core European countries. The limited headway in productivity by the Spanish economy should be a cause for great concern, since productivity gains are the only mechanism which can generate sustained, stable growth of per capita income in the long term. The consensus in this respect in economic circles is practically unanimous, and the repute of the studies in this area is attested to by the Nobel prizes in economics awarded to Robert Solow and Paul Romer in 1987 and 2018, respectively, for their contributions in the fields of productivity and longterm economic growth. A few figures will suffice to illustrate how improvements in a community’s standard of living over the long term depend almost entirely on productivity gains. Thus, for example, 80% of the increase in US per capita income since 1948 can be attributed to the growth of total factor productivity (TFP).2 In other words, increases in TFP of around 2% per year have allowed the average US citizen to enjoy inflation-adjusted annual income which in 2015 was about $ 30,000 higher than in 1948.