The S&P Spain Manufacturing PMI declined to 48.7 in March 2026 from 50.0 in February, signaling the sharpest contraction since April 2025 and undershooting market expectations of 50.4. The escalation of conflict in the Middle East intensified geopolitical uncertainty, disrupted supply chains, and drove a marked increase in energy and input costs.
Both output and new orders fell at a faster rate, with international demand recording its steepest decline since April of the previous year. Employment also dropped notably as manufacturers scaled back staffing in response to softer operating conditions.
Business confidence weakened markedly, slipping to its lowest level since October 2023. Firms expressed mounting concern about a prolonged economic slowdown and persistent inflationary pressures. Input costs rose at their fastest pace since late 2022, while supplier delivery times lengthened to the greatest extent in more than three years. In this environment, companies increasingly drew down existing inventories, cut back on purchasing activity, and raised selling prices where demand allowed.
