Spain: Composite PMI jumps in February, improvements noted across Spanish industries
March 3, 2017
The Markit Purchasing Managers’ Index (PMI) Composite Output Index rose to 57.0 in February, up from January’s 54.7 and marking an 18-month high. As a result, the index remains comfortably above the 50-point threshold that separates expansion from contraction in business activity.
The Markit Spain Manufacturing PMI fell slightly from January’s over one-year high of 55.6 to 54.8, but remained firmly in expansionary territory. New orders and output continued to grow robustly, underpinned by both stronger domestic and external demand. Higher activity prompted firms to hire additional workers, though at a slower pace than in January. Notwithstanding higher staffing levels, the surge in new orders meant that backlogs of work continued to mount. Input costs continued to rise, increasing at the fastest pace since April 2011. However, firms managed to pass most of the additional costs onto clients, though output prices rose at a slower pace than in January. Demand is proving to be robust enough to withstand these output price hikes.
Meanwhile, the Markit Spain Services PMI rose markedly to 57.7 in February from January’s 54.2. The index rose at its fastest pace since August 2015 as both business activity and new orders ramped up. Higher workloads and business optimism led to service providers increasing staff levels for the twenty-ninth consecutive month, though the rate of job creation was largely unchanged from January. Regardless, growth in new orders outpaced the growing workforce as backlogs grew at their fastest rate in nearly two years. Input costs continued to soar following January’s 70-month high due to increased labor and energy costs, though at a marginally slower pace than the previous month. Output prices, meanwhile, grew at a more restrained pace in February. As noted by Andrew Harker, senior economist at IHS Markit, “[services] firms remain to be convinced that client demand is sufficiently robust to accept stronger price rises.”
Author: Christopher Thomas, Economist