Spain: Composite PMI edges down in June
Largely reflecting an improvement of business conditions in the services sector, the IHS Markit composite Purchasing Managers’ Index (PMI) edged down from 55.9 in May to 54.8 in June. However, the index still lies above the 50-point threshold, indicating healthy expansion in business activity in the Spanish economy.
The IHS Markit services PMI dropped from 56.4 in May to 55.4 in May. June’s pick-up in business activity reflected slower growth in new business and output, which were robust nevertheless. Strong client demand sustained the marked increase in new business, which led to another month of accumulation of backlogs of work and of job creation. Regarding prices, input price inflation rose at the fastest pace since September 2008 on the back of higher fuel prices and labor costs. Consequently, businesses passed these higher costs on to consumers; however, output price inflation was much lower than input cost inflation. Lastly, and despite recording the second consecutive month of decline, business confidence among service providers remained strong in June.
Meanwhile, the IHS Markit manufacturing PMI remained unchanged at May’s nine-month low of 53.4 in June. June’s reading was mainly the result of faster growth in new orders offsetting a weaker expansion in in output. Output increased at the softest pace in ten months in June, helped by faster growth in new orders. Due to higher orders, and despite solid job creation, backlogs of work accumulated further. On the price front, input costs rose notably, reflecting higher oil and steel prices. As a result, output price inflation increased at the swiftest pace since January 2017. Firms stayed optimistic in June, although confidence continued to moderate.