Spain's manufacturing sector experienced its most rapid expansion in more than two-and-a-half years this October, driven by robust growth in both output and new orders, as market demand improved, according to the recent purchasing managers' survey conducted by S&P Global. The HCOB Spain Manufacturing Purchasing Managers' Index climbed to 54.5 from September's 53.0, exceeding economists' forecast of 53.1. This marks the highest level since February 2022.
A PMI reading above 50 indicates growth within the Spanish manufacturing sector for the ninth month running.
This PMI survey was conducted between October 10 and October 24.
Export orders surged at their quickest pace in nearly three years. In response to this business upturn, buying activity and employment both saw increases in October.
Input cost inflation remained moderate, partly due to a slight dip in crude oil prices during October, while output costs decreased for the second consecutive month.
Ongoing capacity constraints continued to pressure manufacturers, with backlogs being reduced at the most rapid rate since May and faster than the average pace.
"The strong demand in Spain's manufacturing sector exceeds current supply capabilities, leading to accumulated backlogs," stated Jonas Feldhusen, an economist at Hamburg Commercial Bank.
"For Spanish workers, this is encouraging news, as addressing these backlogs and fulfilling the increasing orders will necessitate additional hiring. Companies are also striving to increase their stock of intermediate goods to meet growing production demands."
Business confidence reached its highest point since May, as firms anticipated improved sales and a more favorable economic climate in the coming year.
"Manufacturing companies are aiming to expand their workforces and maintain optimism for a stable economic landscape, bolstered by the ECB's supportive measures," Feldhusen noted.
"Nevertheless, global risks remain, including potential challenges posed by the upcoming U.S. election, impacting trade, as well as potential escalations in the Middle East, which could affect oil prices."
