Spain: Composite PMI dips but still signals upbeat manufacturing and services activity in August
The IHS Markit composite Purchasing Managers’ Index (PMI) dipped from 61.2 in July to 60.6 in August, reflecting milder growth in the services sector more than offsetting a stronger expansion in manufacturing activity. However, the index remained entrenched well above the 50-threshold, signaling another marked increase in business activity over the previous month.
The IHS Markit Manufacturing PMI rose to 59.5 in August from 59.0 in July. Faster increases in output and employment levels were behind August’s reading, which again benefited from upbeat domestic and foreign demand. That said, the persistent global supply chain disruptions, coupled with robust demand, translated into longer delays in delivery and higher cost inflation.
Meanwhile, the IHS Markit Services PMI declined to 60.1 in August from 61.9 in July, signaling still-upbeat growth in employment and business volumes amid the vaccine rollout. New business was supported by sustained domestic and external demand. On the inflation front, input cost inflation remained elevated, amid higher prices for energy and material and rising wages. Therefore, companies hiked output prices, albeit at a considerably softer pace then input costs. Lastly, confidence eased from July but remained strong.
Commenting on the Manufacturing PMI, Paul Smith, economics director at IHS Markit, said:
“While there was little sign of the supply situation improving, there was further evidence that firms are looking to mitigate the impact of disruption by storing up inputs for future use. The extent to which manufacturers are successful in these efforts will likely dictate whether they are able to maintain the strong rates of production growth into the rest of the year.”
Meanwhile, commenting on the Services PMI, Smith stated:
“The current strong growth phase in the Spanish service sector was sustained during August as the economy continues to benefit from a loosening of lockdown restrictions and successful vaccine rollout. […] International travel remains some way from normality. Companies will be hoping that international travel can open up more soon to help boost the sector as the summer season draws to a close”