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Spanish manufacturing sector returns to marginal growth in March

Christian Fernsby ▼ | April 2, 2019
Spain's manufacturing economy returned to growth during March.
Spanish manufacturing
Europe   The IHS Markit Spain Manufacturing PMI improved to 50.9 in March
However, the expansion was marginal amid only slight gains in output, new orders and employment.

Price pressures also remained subdued as previous supplyside constraints showed further signs of softening over the month. Confidence about the future was little changed.

The IHS Markit Spain Manufacturing PMI improved to 50.9 in March, up from February's 49.9.

Despite strengthening on the month and returning to a level back above the 50.0 no-change mark that separates growth from contraction, the latest reading was subdued in the context of those seen throughout much of the past five years.

Supporting the PMI were slight gains in both output and new orders.

Production, and the subsequent release, of new product lines was reported in some instances to have supported growth.

There was also evidence of an upturn in foreign demand as highlighted by a solid gain in new export orders, although growth remained amongst the softest in recent years amid reports of a challenging international demand environment.

Latest market groups data indicated noticeable divergences in performance.

On the one hand, the consumer goods category registered strong increases in output, new work and employment.

In contrast, operating conditions faced by investment goods producers continued to deteriorate, whilst there was a broad stagnation of the intermediate goods sector.

With only marginal overall growth in new work and output registered in March, purchasing activity amongst Spanish manufacturers rose at an equally subdued pace.

Latest data also revealed only slight falls in both stocks of inputs and finished goods.

Meanwhile, there was little evidence of any capacity constraints in the manufacturing economy during March.

Backlogs of work were unchanged since February which in part reflected a modest uptick in staffing levels.

Growth of employment has now been recorded in each month since January 2014.

There was little evidence of price pressures during the latest survey period.

Input costs, having fallen for the first time in nearly three years during February, rose only marginally.

Whilst there were some reports of higher metals prices, excess market supply for some raw materials helped to dampen overall inflation.

Indeed, March's survey revealed that previous supply side constraints showed signs of easing.

Although delivery times extended over the month, they did so at the weakest rate since January 2016.

With input costs up only marginally, and demand conditions subdued, output charges were raised only slightly in March.

Finally, confidence regarding future activity remained in positive territory during March.

There were positive projections for sales and hoped for success from new product launches.

However, uncertainty stemming from upcoming elections, plus worries over the strength of underlying demand in European markets served to restrict optimism.