Spanish services growth cools, still above trend, PMI shows

What happened

Spain’s services activity index fell to 57.2 in October from 58.3 in September, but remained above the 50 threshold that separates growth from contraction. Growth slowed for a fourth month as new business growth eased and export sales fell; hiring continued and input costs rose.

Confirmed

Global impact / market context

Continued expansion and stronger hiring point to ongoing demand for Spanish service providers, supporting revenue and jobs. But slower new business growth and falling export sales could limit future sales, while rising energy, fuel and transport costs may pressure companies’ profit per sale if they cannot pass costs on.

Analyst inference

Business confidence reached its highest level since February, with firms citing earlier investment plans and hopes around the November 29 general election. That optimism contrasts with cooling new business and a second month of declining export orders, while input price inflation accelerated and output price inflation eased.

Confirmed

What to watch

1. Watch whether new business growth recovers from its five-month low and export sales return to growth; continued weakness could restrain service firms’ revenue despite expansion. Analyst inference
2. Track whether higher energy, fuel and transport expenses feed into selling prices; the survey says input price inflation rose while output price inflation eased. Confirmed
3. Follow hiring and business confidence in subsequent surveys, including whether firms’ election-related hopes translate into stronger demand or investment plans. Analyst inference

Evidence

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