Spain: Composite and Services PMIs recover lost ground in August
September 5, 2016
The IHS Markit Purchasing Managers’ Index (PMI) Composite Output Index came in at 54.8 in August, which was above July’s 53.7 reading, the lowest value since November 2013. This brings the index further above the 50-threshold that separates expansion from contraction in business conditions.
The IHS Markit Spain Services PMI proved resilient and rose back to 56.0 in August, which mirrored June’s figure and was notably above July’s 54.1. The index, firmly entrenched in expansionary territory, improved in August on the back of faster expansions in business activities and new orders, with tourism-related services recording the largest increase in activity. In addition, higher activity levels prompted companies to hire additional staff at a solid pace. Especially relevant was the increase in output prices at the highest rate since February 2008. In this regard, IHS Markit analyst Andrew Harker commented, “August saw another solid performance from the Spanish service sector, with companies reporting success in acquiring new customers. A key take away from the latest survey was further evidence of pricing power returning to firms as they were able to raise their output prices to the greatest extent since prior to the economic crisis.”
Finally, the IHS Markit Spain Manufacturing PMI held steady in August at July’s 51.0 reading, which is the lowest figure in over two years. Nonetheless, the index remains above the 50-threshold that separates expansion from contraction in the manufacturing sector. According to IHS Markit, the result came on the back of weak employment growth levels and feeble expansions in production and new orders.
Author: David Ampudia, Economist