The manufacturing sector, however,  BIS Review 117/2006  3  has recently seen high productivity gains and some stabilisation of unit labour costs relative to the euro area countries. Turning to inflation, we have seen two very different trajectories in 2006. In the first half of the year, price increases were very high, driven by labour costs and by widening margins, but especially by higher oil prices. The 12-month rate of increase of the CPI held at close to 4% until July, with a differential in relation to the euro area that at one point was 1.8 percentage points (pp), above the average differential observed since 1999. However, the decline in oil prices that began in August has swiftly passed through to prices in the Spanish economy. As a result, the CPI rate stood at 2.5% in October, 1.4 pp below the July rate. That enabled the differential with the euro area countries to be cut by 1 pp, to slightly below the average in recent years. The improvement in underlying inflation was, however, very limited, and this variable is holding at a rate of close to 3%. Admittedly, 2006 may possibly close with a growth rate somewhat higher than that of the previous year. But the outlook for 2007 points to a slight slowdown in GDP growth, as part of a continuation of the patterns in recent quarters I have described to you.
BIS Review 38/1997  -7-  Diagram 3a  Real w ages and em ployed persons, EU and U SA, 1970-97 Index 1970=100 EU  170  USA  170  170  160  160  150  150  140  140  130  130  130  120  120  120  110  110  110  100  100  100  90  90  90  80  80  80  160  R e a l wa ges  150 140 130  E m ploy m ent  120  70  72  74  76  78  80  82  84  86  88  90  92  94  96  98  170 160 150  E m ploy m ent  140  110  R e a l wa ges  100 90 80  70  72  74  76  78  80  82  84  86  88  90  92  94  96  98  S ource : O E CD  As shown in Diagram 3a, since 1970 the average real wage in the United States has risen by a total of 15 per cent but by as much as 60 per cent in the EU area. The change in employment, as I mentioned earlier, has been the opposite.