Spain: Composite PMI signals upbeat manufacturing and services activity in July
August 11, 2021
The IHS Markit composite Purchasing Managers’ Index (PMI) dipped from a historic high of 62.4 in June to 61.2 in July, reflecting somewhat milder growth in both the manufacturing and the services sector. However, the index remained entrenched well above the 50-threshold, signaling another marked increase in business activity over the previous month.
The IHS Markit Manufacturing PMI dropped to 59.0 in July from 60.4 in June, which had marked the strongest improvement in operating conditions in the manufacturing sector since April 1998. Sharp, albeit somewhat softer increases in new orders, output and employment levels were behind July’s reading, which again benefited from robust domestic and foreign demand, particularly from neighboring European countries and North Africa. That said, the persistent supply shortages, coupled with robust demand, translated into longer delays in delivery and sustained cost inflation.
Meanwhile, the IHS Markit Services PMI declined to 61.9 in July from 62.5 in June, signaling somewhat softer, albeit still-upbeat, growth in demand, employment and business volumes amid the vaccine rollout. New business was supported by sustained domestic and external demand. On the inflation front, input cost inflation remained elevated, amid higher prices for fuel, energy and transportation. Therefore, companies hiked output prices, albeit at a somewhat softer pace then in June. Lastly, confidence eased from June’s hit a 17-year high but remained strong.
Commenting on the Manufacturing PMI, Paul Smith, economics director at IHS Markit, said:
“Cost pressures and acute product shortages remain a genuine concern for firms. With rising COVID-19 infections around the globe also a worry, optimism about the future subsequently fell in July to its lowest for six months.”
Meanwhile, commenting on the Services PMI, Smith stated:
“There were some hints of the ongoing challenges faced by the sector, with recent rises in infection numbers reportedly leading to some cancellation of orders and heightened caution, especially amongst foreign clients when booking hospitality.”