Spain: Composite PMI drops in July
The S&P Global Composite Purchasing Managers’ Index (PMI) fell to 52.7 in July from June’s 53.6, reflecting considerably weaker activity in the manufacturing sector and slightly slower growth in the services sectors. That said, the index remained above the threshold of 50, signaling expanding business activity over the previous month.
The S&P Global Services PMI dipped to 53.8 in July from 54.0 in June. Activity continued to expand solidly, but new orders recorded only a slight increase. Meanwhile, firms hired additional staff. On the price front, input cost inflation moderated to a six-month low but remained elevated, fueled by higher prices for energy and utilities, as well as rising wages. In response, companies hiked output prices significantly. Lastly, business confidence fell to an almost two-year low, weighed down by growing concerns over high prices and economic instability.
Meanwhile, the S&P Global Manufacturing PMI dropped to 48.7 in June from 52.6 in July—the worst reading since the outbreak of the pandemic. Output, new orders and employment all contracted. On the price front, input prices continued to increase markedly, although the pace of increase was the softest since February 2021. Costlier inputs fed into higher pricing. Lastly, confidence regarding the future sank to its lowest level since spring 2020, hit by elevated inflation, the war in Ukraine and recession concerns.
Commenting on the Services PMI, Paul Smith, economics director at S&P Global, stated:
“It’s hard not to be a little concerned about growth in the coming months, with some real devils in the survey detail to be found this month. As the bounce in activity related to the easing of pandemic-related restrictions continues to fade, there were reports by panelists of growing client hesitancy as inflation and fears over economic recession mount. Several respondents noted that tourism numbers – an important driver of the Spanish economy – are generally lower than normal.”
Commenting on the Manufacturing PMI, Smith again noted the importance of inflation:
“Whilst instability in Europe due to the ongoing war in Ukraine was a factor hurting demand, long-running inflationary pressures – which remain elevated – are also biting, weighing on sales and market activity.”