Spain: Composite PMI dips to near six-year low in July
August 5, 2019
Reflecting the ongoing contraction of the goods-producing sector and slower growth in the services sector, the IHS Markit composite Purchasing Managers’ Index (PMI) edged down from 52.1 in June to 51.7 in July, the lowest reading since November 2013. That said, the index remains above the 50-point threshold, indicating healthy expansion in business activity.
The IHS Markit Manufacturing PMI edged up to 48.2 in July from 47.9 in June, which had marked an over six-year low. Despite the uptick, the print signaled contractionary conditions in the sector. Both new orders and production continued to decline in the surveyed month, against the backdrop of frail demand at home and abroad. Amid concerns over future output and the weak trend seen in new orders, manufacturers reduced their staff levels for the third month running, while business confidence deteriorated to an over six-year low. On the price front, input costs fell for the second month in a row and selling prices were reduced accordingly.
Meanwhile, the IHS Markit Services PMI dipped to 52.9 in July from 53.6 in June on slower activity growth. This was mainly due to a softer rise in new business; notably, export orders contracted in the surveyed month. That said, firms continued to hire workers in July, with the pace of job creation quickening to a three-month high. On the price front, input cost inflation was elevated, largely reflecting higher employment expenses. Service providers lifted output charges only slightly, however, amid strong competition and in a bid to stimulate sales. Lastly, business confidence remained positive but concerns still lingered over the current economic and pollical environment.
Author: Javier Colato, Economist