Spain December services PMI 57.3 vs 54.1 expected

• Prior 53.1
• Composite PMI 56.8
• Prior 53.2

This just reaffirms that the Spanish economy remains one of the few bright lights in the euro area, once again shining brightly. Business activity picked up in December, underpinned by a sharp rise in new business. HCOB notes that:

“These are impressive figures for the end of the year. The HCOB Composite PMI for Spain significantly increased in
December, primarily driven by strong results in the services sector. Manufacturing also showed solid growth. Given these
positive developments, it is quite realistic to expect that Spain’s economic growth could reach 3% in 2024.

“In the services sector, activity increased significantly in December, which is also reflected in an improved order situation.
Additionally, the effects of the DANA weather phenomenon, which caused flooding in the Valencia region, have led to
numerous insurance and reconstruction cases, generating additional orders. Furthermore, foreign orders have increased
again after a decline in the previous month, likely due to increased tourism activities from neighbouring European countries,
as anecdotal evidence suggests. The increased activity and new orders are resulting in more work. Companies are therefore
trying to hire additional workers to cope with the workload.

“Prices remain elevated. Both costs for companies and prices charged rose in December. The cost pressure on companies
is increasing due to higher wages and rising fuel prices. Looking at the entire history of the PMI price component, it is
noticeable that neither input costs nor output charges have settled at levels before the inflation shock. This could indicate
that the problem of service inflation could worsen again. We expect that the inflation rate in Spain will rise to just under three
percent in December, further diverging from the ECB’s target.”

This article was written by Justin Low at www.forexlive.com.