Spain: Composite PMI edges up to 20-month high in April
May 4, 2017
The Markit Purchasing Managers’ Index (PMI) Composite Output Index increased to 57.3 in April from 56.8 in March, the best reading since August 2015 and a testament to the resilient performance of the Spanish economy. The index remains comfortably above the 50-point threshold that separates expansion from contraction in business activity.
The Markit Spain Services PMI rose from 57.4 in March to a 20-month high of 57.8 in April. Service providers continued to benefit from improving domestic economic conditions in April, with both activity and new order growth gaining further steam compared to March. This, in turn, led to another month of increasing backlogs of work, which prompted firms to continue hiring through the month. In fact, the pace of employment growth was the fastest in nine months. Meanwhile, in a show of confidence, companies largely reported that they expect these upbeat trends to continue throughout the year. Regarding prices, firms experienced steep cost-push inflation but were able to roll over these costs onto customers, with output inflation in April just shy of March’s decade-high figure. Consumers’ ability to withstand such increases and the robustness of new business is a testament to Spain’s resilient performance so far this year.
Meanwhile, the manufacturing sector also experienced renewed momentum in April. The Markit Spain Manufacturing PMI bounced from a six-month low of 53.9 in March to 54.5 in April. Output growth quickened to a three-month high, while new orders picked up pace on the heels of strengthening client demand. Robust growth in new work led companies to expand their staffing levels, but shortages of raw materials prompted backlogs of work to increase through April. Although at still high levels, input inflation eased from March’s near-six-year high. Manufacturers were largely able to pass these costs onto customers.
Author: David Ampudia, Economist