Spain’s service sector grows fastest in 7 months on renewed employment

In the month of June, Spain’s service sector grew at the fastest pace in seven months as firms witnessed renewed hiring, which fuelled hopes that the economy will survive the political deadlock of two inconclusive elections.

The consecutive elections, held in December and June failed to conclude a clear majority winner, leaving Spain in a political deadlock, with only a caretaker government, although the failure of parties to reach an agreement on leadership has yet to affect the economy.

Purchasing Managers' Index (PMI) of service companies stood at 56.0, up from 55.4 in May, and marking the 32nd straight month, the index was above the 50 line separating growth from contraction, data released by Markit Economics showed Tuesday.

According to a report published by Markit, June’s service sector confidence has revamped on hopes of an end to political instability, both in Spain and in Britain, and was conducted before the June 26 election and June 23 vote on Britain's EU membership.

"The most pleasing aspect of the latest findings was the fastest rise in employment since before the economic crisis, suggesting some confidence among firms in the underlying demand environment," said Andrew Harker, Economist, Markit.

Markit’s service sector employment index jumped to 55.7 in June from 52.3 in May, Markit showed. Spain’s seasonal rush of tourists from various parts of the world to witness the bountiful summers helped cut registered unemployed to its lowest level in June since September 2009, official data showed.