Spain June manufacturing PMI 48.0 vs 47.7 expected

• Prior 48.4

Despite the reading being higher than estimates, it still marks a further contraction in Spain's manufacturing sector as it is lower than May. Worsening demand conditions continue to weigh as downturns in output and new orders were both sustained. HCOB notes that:

"In Spain, there are signs of a mild recession for the manufacturing sector, or perhaps just stagnation. For example, the HCOB PMI production index is slightly in contractionary territory for the second time in a row, and companies are purchasing fewer goods than in the previous month, without the contraction having accelerated here.

"In sectoral terms, the decline in output is once again concentrated in particular on intermediate goods, which many companies had apparently stocked up on to a somewhat exaggerated extent for fear of supply chain bottlenecks, which are now normalizing. However, output is being stabilized by capital goods, benefiting from stronger demand from projects financed by the EU Next Generation Fund, among other things. And things are likely to remain stable here, as the order situation has improved in this subsector.

"The weakness in the manufacturing sector is likely to continue for a few more months, as new orders overall fell for the third month in a row. The fact that this downturn is unlikely to be particularly deep can also be seen from the fact that the companies surveyed - after a dip in the second half of 2022 - are only now starting to cut staff and the corresponding index value of slightly below 50 points does not signal strong downward momentum. Some stability is also provided by order backlogs, which, according to DG ECFIN, fell in the second quarter but remain at a relatively high level in historical terms with a range of over five months.

"On the price front, companies have already been cutting their selling prices for three months. Indeed, Spain's inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term is currently among the lowest in the eurozone. However, this should not obscure the fact that the core rate of inflation, which excludes energy and food, is broadly in the middle within the monetary union at 6.1% and is significantly influenced by prices in the services sector, which is growing robustly providing companies with pricing power."