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Spain PMI January 2022

Spain: Composite PMI signals contracting activity for first time in nearly a year in January

The IHS Markit Composite Purchasing Managers’ Index (PMI) plunged to 47.9 in January from 55.4 in December, reflecting a sharp downturn in the services sector amid the spread of the Omicron variant. Consequently, the index fell below the 50-threshold, signaling declining business activity over the previous month.

The IHS Markit Services PMI slumped to 46.6 in January from 55.8 in December, signaling falling activity and new business. Moreover, although firms continued to add staff, the pace of job creation moderated. On the price front, input costs continued to rise sharply, fueled by higher prices for energy, fuel and transportation. Therefore, companies hiked output prices at the fastest pace on record. Lastly, confidence remained in positive terrain thanks to hopes of a waning pandemic effect, as well as sustained prospects of rising demand ahead.

Meanwhile, the IHS Markit Manufacturing PMI was unchanged at December’s 56.2 in January, amid a sharper increase in new orders, stronger employment growth and as production growth was constrained by continued supply chain disruptions. Meanwhile, input prices increased at a softer albeit still remarkable pace, while the rise in output prices was the fastest on record. Lastly, confidence regarding the future hit a four-year high amid easing concerns over the pandemic and rising hopes for robust demand dynamics ahead.

Commenting on the Services PMI, Paul Smith, economics director at IHS Markit, stated:

“Mixed in with the Omicron challenge however were reports of growing uncertainty in the marketplace, with rapid inflation rates causing some concerns for service providers and their clients.”

Commenting on the Manufacturing PMI, Paul Smith noted:

“Despite easing further, supply-side constraints persist, and continue to support extremely high price pressures. These factors remain a worry for firms, although they have been able to pass on a decent proportion of their elevated costs to firms by raising charges at an unprecedented pace in January.”

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