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Manufacturing output in Spain rises sharply at start of 2018

Staff Writer | February 3, 2018
Business conditions in the Spanish manufacturing sector continued to improve markedly at the start of 2018.
Manufacturing output in Spain
Spain   IHS Markit Spain Manufacturing PMI
Output rose sharply amid further increases in new orders.

In order to facilitate growth of production, panellists took on extra staff and increased purchasing activity.

Moreover, sentiment regarding the 12-month outlook strengthened to a one-year high.

Meanwhile, input cost inflation accelerated.

This partly reflected an increase in the oil price, but also higher costs for raw materials given further strong demand for inputs.

The headline IHS Markit Spain Manufacturing PMI is a composite single-figure indicator of manufacturing performance.

It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.

Any figure greater than 50.0 indicates overall improvement of the sector.

At 55.2 in January, from 55.8 in December, the PMI pointed to another marked monthly improvement in the health of the manufacturing sector.

Business conditions have now improved in 50 successive months.

Although the rate of expansion eased slightly from the previous month, manufacturing output rose sharply again in January.

Higher production was mainly linked to new order growth and fed through to a fifth successive increase in stocks of finished goods.

The pace of expansion in new business ticked up at the start of the year.

Meanwhile, new export orders rose at a sharp and accelerated pace.

Rising new orders were reflected in a solid monthly increase in backlogs of work, and one that was broadly in line with that seen in December.

Higher output requirements, efforts to build stocks and preparation for further increases in workloads encouraged manufacturers to take on extra staff.

The rate of job creation was sharp, and only slightly weaker than in the previous month.

Similar factors also supported a rise in purchasing activity, which in turn helped lead to a modest accumulation of stocks of purchases.

A further lengthening of suppliers’ delivery times was recorded amid reports from panellists of raw material shortages.