Spain PMI December 2018


Spain: Composite PMI ticks down in December

January 4, 2019

Reflecting weaker activity growth in the manufacturing sector, the IHS Markit composite Purchasing Managers’ Index (PMI) edged down from 53.9 in November to 53.4 in December. Nevertheless, the index remained above the 50-point threshold, indicating healthy expansion in business activity.

The IHS Markit services PMI remained unchanged at November’s 54.0 in December. The continuation of strong business activity came on the back of robust growth in incoming new business from domestic costumers. Foreign sales, on the other hand, declined for the fifth consecutive month, partly due to the negative impact of French protests. Robust domestic demand translated into rising backlogs of work, and the pace of staff recruitment accelerated to the fastest rate since August. On the price front, operating costs climbed at a marked pace, partly due to rising labor costs. This prompted companies to increase their selling prices. Lastly, business confidence strengthened, thanks to improved investment prospects and better perceptions of economic conditions.

Meanwhile, the IHS Markit Manufacturing PMI edged down from 52.6 in November to to an over two-year low of 51.1 in December, indicating a softer improvement in operating conditions compared to the previous month. Slower expansions in output and new orders were largely behind the decrease. That said, demand from the U.S. and Central America was robust and continued to support export orders. However, backlogs of work declined somewhat, and job creation was among the slowest recorded in the past five years. Regarding prices, input cost inflation slowed notably, largely due to lower oil prices. Subsequently, output prices nearly stagnated. Finally, despite the general deterioration of conditions, business confidence hit a three-month high amid heightened expectations on foreign sales.

FocusEconomics Consensus Forecast panelists expect GDP to expand 2.2% in 2019, which is unchanged from last month’s forecast, and 1.9% in 2020.

Author: Massimo Bassetti, Senior Economist

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Spain PMI Chart

Spain PMI December 2018

Note: IHS Markit Spain Purchasing Managers’ Index Manufacturing, Services and Composite Index. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: IHS Markit.

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