Spain January services PMI 54.9 vs 56.7 expected

• Services PMI 54.9 vs 56.7 expected and 57.3 prior
• Composite PMI 54.0 vs 56.8 prior

Key findings:

• Jobs added in response to rising workloads and capacity pressures
• New business growth fastest since April 2023
• Input cost inflation sharpest in nearly a year

Comment:

Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:

“Last year’s fourth quarter GDP figures once again surprised to the upside, driven by a robust labor market that bolstered
private consumption. Investments also picked up pace, likely spurred by the effects of the ECB’s monetary policy easing.
However, the latest HCOB composite Output PMI for Spain’s private sector economy suggests that growth has softened
somewhat at the beginning of the year, as the upturn in both manufacturing and services moderated.

“Business activity in the service sector softened at the beginning of the year, but activity remains comfortable after the high
seen in December. Domestic orders even accelerated, aligning with strong national demand, whereas demand from abroad
notably softened, likely reflecting weakness in the European core countries.

“The labour market situation in Spain’s service sector is particularly pleasing. Hard figures point to strong employment
growth across the entire Spanish economy. Our corresponding HCOB Employment Index steepened sharply in January,
underscoring companies’ needs to increase staff levels to match orders. In line with this, companies expressed greater
additional future confidence towards the future, building on an already high level.

“Concerns remain when analysing services price developments. Panellists reported accelerated input cost inflation. There
are two issues following this recent trend. First, from the beginning of 2024 to autumn 2024, service input cost inflation
remained high, but the pace lost momentum. Over the last two months, input price inflation accelerated again. Second,
although the level of this acceleration is far from the levels seen in 2022 in the aftermath of the pandemic, January’s Input
Price Index is higher than in the period from 2009 to 2020. This should be worrying. Prices charged inflation also remain
elevated in the context of the survey history.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.