Spain: Composite PMI climbs up in November
December 5, 2016
The Markit Purchasing Managers’ Index (PMI) Composite Output Index came in at 55.2 in November, which was above October’s 54.4 reading. As a result of the improvement, the index is now further above the 50-threshold that separates expansion from contraction in business conditions.
The Markit Spain Services PMI rose to 55.1 in November from October’s 54.6. The moderate increase was the result of stronger growth rates in activity and new orders, largely linked to the securing of new customers as well as upbeat business sentiment. Backlogs of work decreased for the second month running, which prompted companies to increase their staffing levels at the fastest pace since August. Regarding prices, input costs rose notably on the back of both higher wages and prices for fuel and energy. However, companies were mostly unable to transfer these costs to customers, with output prices only rising marginally in November.
On the latest price developments, IHS Markit analyst Andrew Harker commented that, “Companies still appear reluctant to enact any meaningful price increases, despite a further solid increase in their own cost burdens. This suggests some ongoing fragility in demand.”
Meanwhile, the Markit Spain Manufacturing PMI rose to 54.5 in November from 53.3 in October, which was the highest figure since January. Improved momentum in operating conditions in the manufacturing sector was reflected by an increase in both output and new work. Strong activity levels led to both a further build-up in backlogs of work and a depletion of inventories to meet increased demand. In turn, companies saw the need to hire extra staff, with the pace of job creation being the fastest since July 2015. Against a backdrop of increasing prices for multiple raw materials, input costs saw another strong rate of growth in November, but firms were only partially able to pass these onto consumers.
Author: David Ampudia, Economist