Spain: Composite PMI remains at five-and-a-half-year low in June
July 3, 2019
Reflecting diverging performances in the manufacturing and services sectors, the IHS Markit composite Purchasing Managers’ Index (PMI) remained at May’s five-and-a-half year low of 52.1 in June. That said, the index remains above the 50-point threshold, indicating healthy expansion in business activity.
The IHS Markit Manufacturing PMI slid from 50.1 in May to 47.9 in June, indicating contractionary conditions in the sector. June’s fall mainly reflected declines in output and new orders. Production contracted for the first time in over five-and-a-half years, and did it at a sharp pace. Moreover, new orders fell at the strongest pace since April 2013, dragged down by falling domestic and external demand. Consequently, manufacturers reduced their staff levels for the second month running, and did so at the fastest pace since April 2013. Regarding prices, input costs dropped and output prices fell accordingly. Finally, business confidence deteriorated again, although it remained in positive territory.
In contrast, the IHS Markit Services PMI climbed to 53.6 in June from 52.8 in May. Faster activity growth was mainly supported by a strong rise in new business, primarily from domestic markets. In line with increased activity and new orders, firms continued to hire workers, albeit at the slowest rate since late-2016. On the price front, input cost inflation was the weakest in nearly two years which, coupled with strong market competition, led service providers to lift selling prices only slightly. Lastly, business confidence improved in June, hitting a three-month high amid improved prospects of market conditions ahead.
Author: Javier Colato, Economist