Spain services PMI slips in July despite upbeat industrial conditions

Spain’s services sector witnessed a slight downfall during the month of July despite upbeat industrial and manufacturing conditions, with the hotels and restaurants reporting a jump in activity during the tourist season and hiring stayed at near eight-year highs, a survey showed on Wednesday.

Markit's Purchasing Managers' Index (PMI) of services companies stood at 54.1 in July, down from 56.0 in June, with the index marking its 33rd straight month above the 50-point mark separating growth in activity from contraction. A tourism boom in Spain as other Mediterranean destinations suffer security fears, have helped to fuel growth in the services sector, as resorts in particular thrive.

After services hiring hit its fastest pace since 2007 in June, firms took on staff in July at a slightly slower rate, with the employment index reaching 55.4 compared to 55.7 a month earlier. This was still the second highest pace of hiring in eight years.

The number of people in Spain registered as jobless fell by 2.23 percent in July from a month earlier, or by 83,993 people, leaving 3.68 million people out of work, data from the Labour Ministry showed on Tuesday.

However, the country’s powerful private and public services sector, which is worth almost three-quarters of total economic output, has underpinned growth and job creation at a time when sectors such as manufacturing have shown signs of faltering.

"The Spanish economic recovery has shown some resilience in the face of a number of headwinds, and the expectation from service providers is for this to continue in the near-term at least," said Andrew Harker, Senior Economist, Markit.