Spain: Composite PMI drops in August
September 7, 2022
The S&P Global Composite Purchasing Managers’ Index (PMI) fell to 50.5 in August from July’s 52.7, reflecting considerably slower growth in the services sectors and another contraction in the manufacturing sector. That said, the index remained above the threshold of 50, signaling expanding business activity over the previous month.
The S&P Global Services PMI fell to 50.6 in August from 53.8 in July. New orders fell in the month, while job creation nearly stalled. On the price front, input cost inflation moderated but remained elevated, fueled by higher prices for energy and fuels and rising wages. In response, companies hiked output prices significantly. Lastly, business confidence improved somewhat, as hopes increased for a better business climate in the next 12 months.
Meanwhile, the S&P Global Manufacturing PMI rose to 49.9 in August from 48.7 in July—which had marked the worst reading since the outbreak of the pandemic. Output rebounded slightly, while new orders contracted again and jobs were lost. On the price front, input prices continued to increase markedly, although the pace of increase was the softest since January 2021. Costlier inputs fed into higher prices, but output price inflation moderated. Lastly, confidence strengthened somewhat but remained subdued overall due to elevated inflation, the war in Ukraine and fears of recession.
Commenting on the Services PMI, Paul Smith, economics director at S&P Global, stated:
“Perhaps one glimmer of hope is that price trends are showing relative improvement as the softening demand
environment reduces some inflationary pressures. However, despite easing again, inflation rates for operating expenses and output charges remain elevated and still well above historical norms.”
Commenting on the Manufacturing PMI, Smith again noted the importance of inflation:
“Although the broad stagnation of the Spanish manufacturing sector was a relative improvement on July’s contraction, the latest survey again pointed to a challenging month for firms during August.”