Spain August manufacturing PMI 50.5 vs 51.5 expected

• Manufacturing PMI 50.5 vs. 51.5 expected and 51.0 prior.

Key findings:

• Increase in new work registered.
• Output and employment both decline.
• Confidence in the outlook sinks to lowest of year so far.

Comment:

Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:

“The trends in Spain’s manufacturing sector keep showing signs of weakening. Although the sector’s index remains
marginally above the critical 50-point threshold, currently positioned at 50.5, the recent three-month trajectory clearly
indicates a move toward stagnation. This development is consistent with the broader global economic environment and does
not come as a surprise. Industrial sentiment across Europe, which had shown signs of improvement in the first half year, has
recently experienced a downturn.”

“Consequently, industrial demand within Spain, sourced from both domestic and
international markets, is now limited to only marginal growth. Furthermore, production levels have declined for the first time
since January, underscoring the sector’s current challenges.
“Business expectations have dropped well below the historical average, reaching their lowest point of the year so far. Some
surveyed companies voiced concerns that industrial momentum across Europe could worsen in the coming months.”

“Reflecting this sentiment, Spanish manufacturers have, for the first time in seven months, initiated layoffs or opted not to
replace departing employees.
“There’s some positive news on the pricing front. Input costs for Spain’s manufacturers saw only marginal increases in
August. Where costs did rise, surveyed companies attempted to pass them on to consumers, though with only limited
success. Due to weaker demand, some firms introduced discounts to prevent a significant drop in sales.”

As a result, sales
inflation was only marginal.
“The manufacturing sub-sectors are showing a mixed picture. While consumer and intermediate goods remain in expansion
territory, the investment goods PMI has dropped sharply into contraction territory. The particularly severe impact on this sub-
sector could be attributed to general uncertainty, prompting firms to respond cautiously by delaying or cancelling
investments.”