Spanish economic activity likely to expand by 0.6% q/q in Q1 16

Italian composite PMIs dropped by 2.2 points at 53.8, with manufacturing output declining to 54.5. The service headline also dropped due to lower new orders. However, improvements were seen in business expectations and hiring intentions.

Spanish January composite PMIs grew marginally to 55.3, as new orders and hiring intentions rebounded, suggesting strong growth in upcoming months.  Manufacturing output grew by 2.4 points to 57.6, while services sector declined by 0.5 point to 54.6. Moreover, new business and hiring intentions remained positive.

"Overall, we are not concerned by the PMIs consolidation as surveys have been more optimistic than actual growth, and thus see this correction as a healthy adjustment" says Barclay in a research note  "We look for Spanish economic activity to expand by 0.6% q/q in Q1 16, after 0.8% q/q in Q4 15 and our Q4 PMI based GDP indicator is slightly above our expectations at 0.7% q/q."