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Spain PMI September 2021

Spain: Composite PMI drops in September amid supply chains disruptions

The IHS Markit composite Purchasing Managers’ Index (PMI) dropped from 60.6 in August to 57.0 in September, reflecting milder growth in both the services and the manufacturing activity. However, the index remained entrenched well above the 50-threshold, signaling another significant increase in business activity over the previous month.

The IHS Markit Manufacturing PMI declined to 58.1 in September from 59.5 in August. Slower albeit still-strong increases in output and new orders were behind September’s cooling, which nevertheless continued to benefit from upbeat domestic and foreign demand. That said, the persistent global supply chain disruptions, coupled with robust demand, translated into long delays in delivery, rising backlogs of work and a near-record high cost inflation.

Meanwhile, the IHS Markit Services PMI declined to 56.9 in September from 60.1 in August, signaling softer growth in employment and business volumes. That said, new business was supported by sustained domestic demand, while export orders remained subdued. On the inflation front, input cost inflation reached the highest level since July 2008, amid higher prices for fuels, utilities and transportation and rising wages. Therefore, companies hiked output prices markedly. Lastly, confidence remained strong.

Commenting on the Manufacturing PMI, Paul Smith, economics director at IHS Markit, said:

“Growth is clearly being restrained by severe and ongoing supply-side delays, which show little sign of dissipating. The impact continues to be clearly seen in prices data, with cost inflation accelerating back towards record levels and firms more than willing to take advantage of strong sales demand to raise their own charges accordingly.”

Meanwhile, commenting on the Services PMI, Smith stated:

“As we move now past this initial strong opening and recovery phase, perhaps the slowdown is not to be unexpected, although some reports of challenges sourcing goods means the sector is not completely immune to the extreme supply challenges that are characterising the manufacturing economy at the moment”.

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