Spain: Composite PMI rises in February but remains in contractionary mode
The IHS Markit composite Purchasing Managers’ Index (PMI) rose to 45.1 in February from 43.2 in January, reflecting renewed growth in the manufacturing sector and a softer contraction in services activity. Despite the increase, the index remained below the 50-threshold, indicating a continued fall in business activity over the previous month.
The IHS Markit Manufacturing PMI jumped from 49.3 in January to a seven-month high of 52.9 in February, indicating an improvement in operating conditions in the manufacturing sector. Both new orders and output rebounded solidly in February thanks to increased demand. That said, firms cut their workforce numbers for the fourth consecutive month, despite business confidence rising to its highest level in nearly three years. Moreover, the combination of supply-side shortages and increased input buying drove input cost inflation to the highest in almost four years, which resulted in firms lifting output charges to the greatest extent in more than two years.
Meanwhile, the IHS Markit Services PMI rose slightly to 43.1 in February from 41.7 in January, signaling a milder contraction of services sector activity. Improved confidence among service providers and a softer drop in employment largely drove February’s climb. Sentiment strengthened as firms expect an improvement in the overall business environment as the worst of the pandemic passes thanks to vaccination efforts. Meanwhile, although job cuts eased, the pace of decline remained marked. On the inflation front, input costs rose noticeably again, but firms continued to reduce output prices in order to remain competitive amid a weak demand environment.