Spain: Composite PMI ticks up in November
December 5, 2018
Reflecting stronger activity growth in the manufacturing sector, the IHS Markit composite Purchasing Managers’ Index (PMI) inched up from 53.7 in October to 53.9 in November. As a result, the index climbed further above the 50-point threshold, indicating healthy expansion in business activity.
The IHS Markit services PMI remained unchanged at October’s four-month high of 54.0 in November. The continuation of strong business activity came on the back of robust growth in incoming new business, reaching a six-month high and reflecting greater demand, particularly amongst customers at home. Foreign sales, on the other hand, were weighed by political and economic-related uncertainty. In line with firmer demand, backlogs of work continued to mount and the pace of staff intake by companies remained above the long-run trend. On the price front, operating costs climbed at a marked pace, owing to higher fuel and labor costs. This translated into higher selling prices, with output charge inflation reaching a four-month high in November. Lastly, business confidence remained relatively weak, as increased political and economic uncertainty again clouded firms’ outlook.
Meanwhile, the IHS Markit Manufacturing PMI edged up from 51.8 in October to 52.6 in November, indicating a further improvement in operating conditions. Faster expansions in output and new orders—reflecting increased demand at home and abroad—were largely behind the increase, particularly in the consumer goods industry. That said, demand from the U.S. weakened in November, hurting the capital goods sector as both production and new orders declined. Firms’ operating capacities remained under pressure, as evidenced by the third successive monthly rise in backlogs of work and continued job creation, albeit at a modest rate, by manufacturers. Regarding prices, input cost inflation remained elevated in November, largely due to higher steel prices. Subsequently, firms passed these higher costs onto customers. Finally, despite the general improvement of conditions, business confidence dipped to its lowest since the summer of 2013 amid heightened concerns over the state of the auto industry demand ahead.
Spain GDP Forecast
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: Javier Colato, Economist