Spain: Composite PMI jumps as manufacturing and services activity expands strongly in April
The IHS Markit composite Purchasing Managers’ Index (PMI) jumped to an over two-year high of 55.2 in April from 50.1 in March, reflecting stronger growth in the manufacturing sector and the first expansion in the services sector since last July. Consequently, the index moved further above the 50-threshold, indicating a marked increase in business activity over the previous month.
The IHS Markit Manufacturing PMI climbed from 56.9 in March to an over 21-year high of 57.7 in April, indicating a stronger improvement in operating conditions in the manufacturing sector. Sharp increases in new orders, output and employment underpinned April’s uplift, which benefited from robust domestic and foreign demand. Moreover, business confidence remained at historically high levels. That said, the combination of supply shortages and robust demand led to severe delays in delivery and translated into the highest pace of cost inflation in 10 years, which in turn resulted in the sharpest increase in output charges since data collection began back in mid-2002.
Meanwhile, the IHS Markit Services PMI surged to a close to one-year-high of 54.6 in April from 48.1 in March, signaling increasing demand and soaring confidence amid an acceleration in the vaccination campaign and easing restrictions. New business was supported mainly by the domestic market, as export sales continued to decline albeit only marginally. Meanwhile, firms took on additional staff for the first time in over one year as previously furloughed employees returned to work. On the inflation front, input costs rose at the fastest pace since August 2008, amid product shortages and rising transportation prices. Therefore, companies hiked output prices but only to a limited extent in order to remain competitive. Confidence was the highest since early 2004, as firms anticipated a strong improvement in demand thanks to vaccination programs and the reopening of the economy.
Commenting on the Manufacturing PMI, Paul Smith, economics director at IHS Markit, said:
“Firms are subsequently looking where possible to strengthen their pre-production inventory levels to avoid any further delays but are nonetheless buffering up against capacity limits and orders are starting to back up.”
Meanwhile, commenting on the Services PMI, Smith stated:
“An extremely positive set of data for April as activity rose markedly on the back of both an uplift in demand and preparations for the reopening of premises in anticipation of a loosening of COVID-19 restrictions. […] The sting in the tail, however, is the rapid rise in operating expenses that firms are experiencing, which remain difficult to pass on to clients amid strong competitive pressures.”