2024-01-05 09:10:48
Spanish business activity picked up again in December, with the composite purchasing managers’ index (PMI) reaching 50.4 from 49.8 in the previous month, boosted by an increase in the services sector.
The economic activity rose in December in response to a rise in the services sector, which hit its highest level since July from 51 in November, while the manufacturing PMI continued to show the sector contracting, although at a slower pace the reading is 46.2 points compared to 46.3 points the previous month.
Cyrus de la Rubia, chief economist at Commerzbank Hamburg, said: “With the composite PMI entering modest expansion territory, there are strong signs that Spanish GDP will maintain its growth trajectory in the fourth quarter.”
In the case of the services sector, the expert highlighted that, in contrast to the economic weakness of Europe in general, “Spain seems to be charting its own course” and, instead of succumbing to the general economic slowdown, Spanish companies are still in a trajectory of expansion.
“Although it is far from a full-fledged boom, the resilience is surprising,” De la Rubia acknowledged, especially considering the subdued mood in the manufacturing sector and the lackluster performance of the services sector elsewhere in the euro zone.
“This notable result can be attributed to two key factors: the new Government’s commitment to expanding support measures for households and, secondly, the warm temperatures of recent weeks which may have inspired residents of Spain to go to the beaches, which has led to an increase in spending,” he noted.
The deterioration of activity in the eurozone in December sounds the alarm bells of recession, according to PMI In December, Spanish service companies reported the largest increase since June in new order volumes, although they stressed that the rebound was mainly focused on the national economy, while new Orders from abroad decreased again in December.
These underlying improvements in both activity and new orders encouraged companies to hire more staff in December, which saw the strongest employment growth since June, extending the current sequence of expansion to fifteen months.
The hiring of additional workers was accompanied by a spike in wage costs in December, so operating expenses continued to rise at the end of the year.
Likewise, overall input costs rose at a historically strong pace even as inflation eased to its lowest rate in four months, while companies again raised their rates at the strongest pace since May.
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