Spain: Composite PMI bounces back from near six-year low in August
September 4, 2019
Largely reflecting faster growth in the services sector, the IHS Markit composite Purchasing Managers’ Index (PMI) rose to 52.6 in August from 51.7 in July, which had marked the lowest print in nearly six years. As a result, the index moved further above the 50-point threshold, indicating healthy expansion in business activity.
The IHS Markit Services PMI climbed from 52.9 in July to a five-month high of 54.3 in August on the back of quickening new business, particularly from the domestic market which more than offset deteriorating demand from abroad. Concerns over future activity capped employment gains in the surveyed month, as the pace of job creation was the weakest since December 2014. Moreover, a more challenging external demand environment led to a fall in business confidence, which touched an over six-year low in August. Lastly, on the price front, despite input cost inflation picking up markedly, service providers cut selling prices for the first time in 16 months amid increased competition—putting pressure on profit margins.
Meanwhile, the IHS Markit Manufacturing PMI edged up to 48.8 in August from 48.2 in July. Despite the uptick, the index remained below the 50-point threshold, where it has been for three consecutive months, and signaled contractionary conditions in the sector. Production fell at the sharpest rate since May 2013, while new orders declined for the fourth month running, albeit marginally. In addition, manufacturers reduced staff levels yet again, although slightly, and while confidence about the future improved, it remained among the weakest in survey history. On the price front, input costs fell mildly, and output charges were unchanged.
Author: Javier Colato, Economist