The headline reading slows in May to an 18-month low, as increased uncertainty weighed on growth in demand and activity on the month. The confidence in the outlook also slumped to its lowest since November 2023. HCOB notes that:
“Cooling conditions in Spain’s private sector economy. The headline HCOB Composite PMI Index for Spain remains just above the growth threshold, supported by weak activity in the service sector, resulting in the softest performance since late 2023. Within the service sector, demand conditions appear constrained—particularly in terms of new business. Reports frequently link this development to uncertainty stemming from tariffs, especially among internationally engaged clients. New business from abroad even declined in May.
“The subdued new order situation is also reflected in outstanding business, which fell for the first time in nearly a year-and-ahalf. Nevertheless, companies continue to seek improvements in staffing levels, although the pace of new hires has slowed. However, as the Spanish economy remains relatively robust - especially compared to other major Eurozone countries - concerns over headcount reductions should remain limited, even amid ongoing global economic uncertainty. Economic risks remain tilted to the downside, as reflected in future business expectations, which have dropped below average, suggesting that customers may act more cautiously in the current environment.
“Service price inflation remained elevated in May. Panellists frequently attributed the rise in input costs to a dual pressure: increasing wages and suppliers raising their prices - often in response to tariff-related effects. Sale prices indicate that companies are still able to pass on higher costs to clients, although output price inflation has continued to ease slightly over the past three months."
This article was written by Justin Low at www.forexlive.com. Read More Details
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