Spain: Composite PMI dips to six-month low in November as Covid-19 cuts demand
December 3, 2020
Reflecting a steeper decline in services activity and a return to contraction by the manufacturing sector, the IHS Markit composite Purchasing Managers’ Index (PMI) dipped from 44.1 in October to 41.7 in November—the lowest reading since May. Consequently, the index dropped further below the 50-threshold, indicating a sharp fall in business activity over the previous month.
The IHS Markit Services PMI slid to 39.5 in November from 41.4 in October, indicating a stronger contraction of service sector activity. New business retreated again in November as Covid-19 associated restrictions restrained consumer mobility and overall demand, with the key hospitality industry particularly badly hit. Amid a lack of new business and resulting excess capacity, firms cut staffing levels once again. On a more positive note, business confidence firmed to its highest since March 2019 on hopes that Covid-19 vaccines will support a strong economic recovery in 2021.
Similarly, the IHS Markit Manufacturing PMI slumped from 52.5 in October to 49.8 in November. Thus, the print pointed to a slight deterioration in operating conditions in the manufacturing sector. Declining new orders were primarily behind the monthly slip, as the pandemic weighed heavily on demand. Factory output was broadly stable from October, but employment declined for the first time in three months amid excess capacity at plants. Lastly, sentiment among good-producers strengthened to its highest in over a year and a half amid optimism that the pandemic will be brought under control.
Author: Javier Colato, Economist