Spain: Composite PMI drops in October
November 7, 2022
The S&P Global Composite Purchasing Managers’ (PMI) fell to 48.0 in October from September’s 48.4. Consequently, the index moved further below the 50-threshold, signaling a contraction in business activity over the previous month and marking the lowest reading since May 2020.
The S&P Global Manufacturing PMI fell to 44.7 in October from 49.0 in September. Both output and new orders contracted at a faster pace due to shrinking demand and high inflation, while employment fell at a stronger pace. On top of this, confidence slipped to the lowest level since May 2020 due to elevated inflation, heightened economic uncertainty and poor demand prospects. However, both input and output prices increased at a considerably softer pace than in September
The S&P Global Services PMI rose to 49.7 in October from 48.5 in September. New orders fell during the month, as did activity. However, jobs were added. On the price front, input cost inflation intensified, with output inflation accelerating in response. Lastly, business confidence remained subdued, weighed down by uncertainty over future growth prospects.
Commenting on the outlook, Wouter Thierie, an economist at ING, stated:
“Despite better-than-expected inflation figures last week, the economic situation is deteriorating very fast. A recession, meanwhile, seems inevitable. Although little data is yet available for the fourth quarter, we assume a contraction of 0.5% quarter-on-quarter in the last quarter of this year. This brings annual growth for 2022 to a still very good 4.3%. However, for 2023, we expect the Spanish economy to grow by only 0.3% year-on-year. High inflation and energy prices combined with higher interest rates and greater uncertainty will dampen demand and investment, putting downward pressure on the growth figures.”