Spain: Composite PMI dips to five-month low in October on sustained deterioration of services sector
November 4, 2020
Primarily reflecting a sharper contraction of services activity, the IHS Markit composite Purchasing Managers’ Index (PMI) slipped from 44.3 in September to 44.1 in October—the lowest reading in five months. Consequently, the index dropped further below the 50-threshold, indicating declining business activity over the previous month.
The IHS Markit Services PMI slumped to 41.4 in October from 42.4 in September, indicating a quicker pace of falling service sector activity. Both activity and new business shrank at the fastest pace since May, driving the overall decline in the index. Demand continued to be constrained by Covid-19, whereby rising cases and apprehension amongst consumers weighed on sales. Amid declining backlogs of work, firms cut staffing levels yet again and for the eighth month running in October. More positively, business confidence strengthened on hopes of improved demand and sales once the pandemic passes.
In contrast, the IHS Markit Manufacturing PMI leaped from 50.8 in September to a three-month high of 52.5 in October. As a result, the print pointed at a noticeable improvement in operating conditions in the manufacturing sector. New orders rebounded while factory output gathered momentum on the back of firmer demand. Moreover, as capacity was enough to keep on top of workloads, employment increased only slightly. Lastly, sentiment among good-producers rose to its highest in eight months on expectations that the pandemic will be brought under control over the next year and a solid recovery will take hold.
Author: Javier Colato, Economist