Spain: Composite PMI drops in October amid supply constraints
The IHS Markit composite Purchasing Managers’ Index (PMI) dropped from 57.0 in September to 56.2 in October, reflecting milder growth in both the services and the manufacturing activity. However, the index remained well above the 50-threshold, signaling another significant increase in business activity over the previous month.
The IHS Markit Manufacturing PMI declined to 57.4 in October from 58.1 in September. Slower increases in output and new orders were behind October’s cooling, which nevertheless continued to benefit from sustained demand. That said, protracted global supply chain disruptions translated a record deterioration in delivery times, surging backlogs of work and a record high cost and charge inflation.
Meanwhile, the IHS Markit Services PMI dipped to 56.6 in October from 56.9 in September, signaling sustained growth in employment and business volumes amid further easing of restrictions. Moreover, new business was supported by sustained domestic and external demand. However, supply constraints translated into a further increase in workloads. On the inflation front, input cost inflation reached the highest level on record, amid higher prices for goods, utilities and transportation. Therefore, companies hiked output prices markedly. Lastly, confidence remained elevated.
Commenting on the Manufacturing PMI, Paul Smith, economics director at IHS Markit, said:
“Spain’s manufacturing economy continued to expand strongly in October, but the double hit of supply constraints and price pressures served to noticeably limit production growth. […] Whilst on balance firms remain optimistic that growth will be sustained, worries over the persistence of unabating price pressures is the biggest fear for manufacturers when assessing the direction of travel over the coming 12 months”
Meanwhile, commenting on the Services PMI, Smith stated:
“Growth should retain some momentum in the near-term, although downside risks remain in play, especially around rising cost pressures […] whilst there were some reports that sourcing goods for use in service provision remains challenging”.