Spain PMI September 2016


Composite and Services PMI ease in September but continue to point to solid activity

The Markit Purchasing Managers’ Index (PMI) Composite Output Index came in at 54.1 in September, which was slightly below August’s 54.8 reading. Despite the modest deterioration, the index remains above the 50-threshold that separates expansion from contraction in business conditions.

The Markit Spain Services PMI edged down to 54.7 in September from August’s 56.0. The weaker reading stemmed from a lower rate of job creation—which eased for the third consecutive month—as well as softer increases in input costs and output prices. Nonetheless, the index signaled robust growth in services activities. The expansion rate in new orders was the sharpest in 10 months in September, while both backlogs of work and outstanding business rose in the same month. In addition, the healthy expansion in new orders drove an improvement in business sentiment.

IHS Markit analyst Andrew Harker sees the result as broadly positive: “Although easing slightly in September, the rate of growth in activity at Spanish services companies remained solid and completed a decent quarter for the sector, particularly given the uncertain political backdrop. With new orders rising at a faster pace than in August, the prospects of growth continuing for the rest of the year appear good. Moreover, sentiment regarding the coming 12 months remained positive, but some firms indicated that this was dependent on uncertainty reducing.”

Conversely, the Markit Spain Manufacturing PMI rose from 51.0 in August to 52.3 in September, the highest reading in five months. As a result, the index is now further above the 50-threshold that separates expansion from contraction in the manufacturing sector. According to IHS Markit, the stronger result came on the back of firmer growth of output, as well as healthier rates of expansion in new orders and employment, the latter rebounding in September after having moderated to a 27-month low in August.

FocusEconomics Consensus Forecast panelists expect GDP to expand 2.8% in 2016, which is unchanged from last month’s forecast. In 2017, panelists expect the economy to increase 2.1%.

Author:, Economist

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Spain PMI Chart

Spain PMI Manufacturing September 2016

Note: IHS Markit Spain Purchasing Managers’ Index Manufacturing Index. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: IHS Markit.

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