Spain PMI

Spain

Spain: Economic conditions ease in June

July 3, 2015

The Markit Purchasing Managers’ Index (PMI) Composite Output Index fell from 58.3 in May to 55.8 in June. Despite the decrease, the index remains above the 50-threshold that separates expansion from contraction in business conditions.

The Markit Spain Services PMI fell to a six-month low in June, but still remains firmly entrenched in expansionary territory. New orders rose at a sharp rate in June, although slightly weaker than May’s result. In addition, the pace of job creation increased for the seventh consecutive month and input prices rose for the fourth month-in-a-row. Markit analysts added that, “the June services PMI survey rounds off an encouraging second quarter of the year for Spanish service providers, with strong rises in activity and new business recorded throughout […] Meanwhile, a long period of price discounting finally came to an end in June as service providers are at last seeing demand strengthen enough to contemplate price rises.”

The Markit Spain Manufacturing PMI fell slightly in June, edging down from May’s result on the back of slower growth in output and new orders. In contrast, employment and backlogs of work rose at a sharper pace than in the previous month. Moreover, the increase in employment marked an eight year high with manufactures’ reporting increasing staffing levels to accommodate higher production and facilitate future growth. Regarding prices, a weak euro and an increase in the price of plastics fueled a rise in input price inflation for the third consecutive month in June. Markit analysts stated that, “signs of capacity pressures building, as firms saw their outstanding business accumulate to the greatest extent since the end of 2006 and raised employment at the fastest pace in eight years accordingly. This was despite weaker expansions of output and new orders in the latest survey period.”

The Central Bank expects the economy to grow 2.8% in 2015 and 2.7% in 2016. FocusEconomics Consensus Forecast panelists expect GDP to expand 2.3% in 2015, which is up 0.2 percentage points from last month’s forecast. In 2016, panelists also expect the economy to increase 2.3%.


Author: Angela Bouzanis, Senior Economist

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Spain PMI June 2015

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


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