Spain: Composite PMI dips from seven-month high in February
March 5, 2019
Reflecting weaker activity growth in the services and manufacturing sectors, the IHS Markit composite Purchasing Managers’ Index (PMI) slipped from January’s seven-month high of 54.5 to 53.5 in February. Nevertheless, the index remained above the 50-point threshold, indicating healthy expansion in business activity.
The IHS Markit services PMI ticked down from January’s seven-month high of 54.7 to 54.5 in February. New business continued to rise robustly in the surveyed month, primarily due to increased demand at home. This led to further accumulation of backlogs of work, prompting companies to take on additional staff. On the price front, operating costs rose at the strongest pace in over a decade, partly reflecting the recent minimum wage hike, which led service providers to lift output charges. Lastly, business confidence remained positive and largely steady compared to January.
Meanwhile, the IHS Markit Manufacturing PMI fell from 52.4 in January to 49.9 in February, marking the first time the index landed below the 50-point threshold since November 2013. February’s dip largely reflected a decline in new orders, the first in two years and a half, particularly from abroad amid weaker demand in Europe and China. Furthermore, although production rose in the surveyed month, it did so only marginally, while the pace of job creation among firms was the weakest in around five years. Regarding prices, input costs fell for the first time since April 2016, largely owing to lower prices for oil-based products, which translated into a reduction in output charges. Finally, business confidence slid to a three-month low in February amid concerns over the sustained weakness in new orders.
Author: Javier Colato, Economist