Spain manufacturing sector remains firm in October on strong improvement in operating conditions

The manufacturing sector of Spain remained firm and healthy during the month of October, following strong improvement in the operating conditions of the sector amid faster rises in output and new orders. The health of the sector has now strengthened in each of the past 35 months, with the latest improvement the greatest since April.

The headline Markit Spain Manufacturing Purchasing Managers’ Index (PMI) rose to 53.3 in October, up from the reading of 52.3 in September. The rate of growth in manufacturing production quickened for the second month running and was solid. Firms linked higher output to increased new business.

Further, both total new orders and new export business increased during October. The rise in total new business was the third in as many months following July’s fall and the strongest since April. Moreover, the rate of inflation quickened for the second successive month to the strongest since June 2015.

Firms raised their purchasing activity in line with higher production requirements, but also partly as a response to expectations of further price increases in coming months. Stocks of finished goods were broadly unchanged, ending a four-month sequence of decline.

"Although remaining modest at present, an intensification of inflationary pressures would be a headwind for manufacturers given that they currently appear under pressure to keep output price rises to a minimum," said Andrew Harker, Senior Economist, IHS Markit.