Recent data points to sustained healthy economic activity in the final quarter of 2018, following strong growth in the previous quarter that was entirely driven by domestic demand. Employment continued to increase at a solid clip throughout Q4 which, coupled with robust services PMI readings in the same period and retail sales likely faring better than in Q3, suggest that private consumption maintained strength in Q4. That said, leading data in December weakened as economic sentiment and the manufacturing PMI edged down, indicating a slight loss of momentum at year-end. In the political arena, the minority Socialist government suffered a major setback on 22 January as its main ally, anti-austerity party Podemos, voted with the opposition against a housing regulation decree. The defeat demonstrates the administration’s parliamentary weakness and raises uncertainty over its ability to garner enough support to pass the 2019 budget, which is set for a vote on 13 February.