Spain: Composite PMI drops in December amid the spread of Omicron variant
The IHS Markit Composite Purchasing Managers’ Index (PMI) dropped from 58.3 in November to 55.4 in December, reflecting softer expansions in both the services and manufacturing sectors. However, the index remained above the 50-threshold, signaling another increase in business activity over the previous month.
The IHS Markit Services PMI fell to 55.8 in December from 59.8 in November, signaling softer albeit still-robust expansions in activity and new business. The spread of the Omicron variant translated into booking cancellations in the hospitality sector. Meanwhile, firms continued to add staff for the ninth consecutive month. On the price front, input cost inflation was the second-highest on record, fueled by higher prices for electricity, energy, materials, fuel and transportation, as well as solid wage pressures. Therefore, companies hiked output prices markedly. Lastly, confidence declined to the lowest level in 11 months amid concerns over the impact of the Omicron variant and persistent supply disruptions.
Meanwhile, the IHS Markit Manufacturing PMI dropped to 56.2 in December from 57.1 in November, due to a slower increase in new orders amid continued supply chain disruptions. That said, output growth accelerated. Meanwhile, input prices increased at a softer pace, while the rise in output prices also moderated, although it remained pronounced. Lastly, confidence regarding the future strengthened.
Commenting on the Services PMI, Paul Smith, economics director at IHS Markit, stated:
“The Spanish service economy maintained its recent run of growth into year-end, though the latest data and reports from panelists suggested that dark clouds were forming for the sector heading into the new year.”