Spain: Composite PMI at highest level since early 2000 as manufacturing and services activity gain steam amid easing restrictions
July 5, 2021
The IHS Markit composite Purchasing Managers’ Index (PMI) jumped to a historic high of 62.4 in June from 59.2 in May, reflecting stronger growth in both the manufacturing and the services sector. Consequently, the index moved further above the 50-threshold, signaling a marked increase in business activity over the previous month.
The IHS Markit Manufacturing PMI climbed from 59.4 in May to 60.4 in June, indicating the strongest improvement in operating conditions in the manufacturing sector since April 1998. Sharper increases in new orders, output and employment underpinned June’s uplift, which benefited from robust domestic and foreign demand, particularly from neighboring European countries and North Africa. That said, the combination of supply shortages and robust demand translated into longer delays in delivery and the highest pace of cost inflation on record, which in turn resulted in the sharpest increase in output charges in the survey’s history.
Meanwhile, the IHS Markit Services PMI rose to 62.5 in June from 59.4 in May, signaling rising demand, employment and business volumes amid easing restrictions, the reopening of activities and the vaccines rollout. New business was again supported mainly by the domestic market, although growth in export sales also strengthened. Moreover, firms took on additional staff at the sharpest pace in over three years. On the inflation front, input cost inflation reached the highest level since July 2008, amid higher prices for utilities, fuel and transportation. Therefore, companies hiked output prices at the strongest pace since early 2000. Confidence hit a 17-year high, as firms expected strong demand conditions to persist ahead.
Commenting on the Manufacturing PMI, Paul Smith, economics director at IHS Markit, said:
“Challenges with supply chains persist, with little sign of these issues easing, not helped in part by firms attempting to purchase goods to either restock inventory or get ahead of further potential price rises.”
Meanwhile, commenting on the Services PMI, Smith stated:
“Sectors related to hospitality are enjoying a resurgence in activity, although perhaps of some worry will be the relative weakness in tourism, with restrictions and challenges on travel from key markets such as the UK weighing on growth.”