Spain PMI

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Spain: Economic conditions improve on services; manufacturing gauge at four-month low

September 3, 2014

The Markit Purchasing Managers’ Index (PMI) Composite Output Index increased from 55.7 in July to 56.9 in August, which marked an 89-month high. As a result, the index is resting comfortably above the 50-threshold that separates expansion from contraction in business conditions.

The Markit Spain Services PMI continued its upward trend in August, reaching the highest level since December 2006. August data showed that new business expanded strongly, which supported job creation and a pick-up in backlogs of work. That said, according to Markit, “discounting was still required to secure sales in a number of cases, while the latest increase in employment was only marginal despite the fastest rise in activity since late-2006.”

The Markit Spain Manufacturing PMI retreated to a four-month low in August. Markit analysts stated that, “although output growth has eased from the sharp rates seen in the second quarter, a faster rise in new business and build-up of backlogs of work suggest that the current sequence of expansion will continue in coming months. One note of caution is that discounting was required in order to secure sales in a number of cases, providing the impression that client demand remains fragile.”

The Central Bank expects the economy to grow 1.3% in 2014 and sees it accelerating to a 2.0% expansion in 2015. Moreover, the government announced that the Spanish economy would grow 1.2% this year before accelerating to 1.8% in 2015. FocusEconomics Consensus Forecast panelists expect GDP to expand 1.1% in 2014, which is unchanged from last month’s forecast. In 2015, panelists expect the economy to expand 1.6%.


Author: Ricard Torné, Head of Economic Research

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Spain PMI August 2014

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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