Spain: Composite PMI points to robust growth in February
A broad-based improvement in operating conditions led the IHS Markit composite Purchasing Managers’ Index (PMI) to pick up to 57.1 in February from 56.7 in the previous month, marking the fourth consecutive rise in the index and the highest reading in seven months. As a result of February’s increase, the index lies further above the 50-point threshold, indicating healthy expansion in business activity in the Spanish economy.
A strengthening in underlying demand buttressed an improvement in the IHS Markit services PMI, which in February rose to 57.3 from 56.9 in January. New business increased notably, which continued to fuel robust output growth—the strongest since last July—and a further accumulation in outstanding work. Higher output requirements also fueled strong employment growth, while business sentiment eased only marginally from January’s seven-month high. On prices, rising wage inflation pushed cost inflation to its steepest since September 2008. Firms were able to raise prices in line with higher input costs, bringing output inflation to its highest rate in shy of 11 years.
Meanwhile, the IHS Markit manufacturing PMI rose to a three-month high of 56.0 in February from 55.2 in January. Instrumental to the increase in the headline figure was a marked pick-up in new order growth, which in February was at its highest in over a year. Increased demand fed through to faster increases in manufacturing output and backlogs of work compared with the previous month, while employment growth was broadly unchanged from January’s solid figure. Purchasing activity increased at a marked pace, while input costs rose notably in light of higher raw material prices. Strong pricing power meant firms were able to pass these additional costs onto consumers.