- Prior 56.7
That's still solid growth but a notable miss on estimates for Spain's services sector. Overall activity and new business saw softer gains on the month but output was the weakest since January. HCOB notes that:
“The Spanish service sector, which has shown a very robust rate of expansion in recent months, is gradually losing momentum, but is still quite solid with a PMI value of 53.4 points. GDP growth is likely to be supported by the good state of the services sector in the second quarter, while the impact of this sector on economic growth was neutral in the first quarter.
“The PMIs show, that the expansion may continue in the coming months, as new business has also risen - at a declining rate - and the order backlog has even increased slightly more than in the previous month. Looking further ahead, even more companies than in the previous month believe that the volume of business will be greater in a year's time than at present. All this fits in with the fact that the Spanish central bank recently raised its growth forecast to 2.3%, an above-average figure compared with the euro zone as a whole.
“Price pressure is easing somewhat according to the PMI price indices, which is in principle good news if you want inflation to come down. However, companies are still in a position to pass on at least part of the input price increases to end customers. In fact, according to the Spanish statistics authority, the core rate of inflation, which excludes energy and food, is declining only very hesitantly from a relatively high level.
“The regional elections that have already been held, as well as the general elections that will be held in Spain at the end of July, have been cited by some companies as one of the reasons why the pace of expansion has slowed. Uncertainty about the plans of a future government is likely to play an important role here.”