Spain‘s services sector ended 2024 on a high, boosted by new business and market recovery after the flooding that hit many areas of the country earlier in the year.
The latest HCOB Spain Services PMI Business Activity Index, produced in association with S&P Global, stood at 57.3 in December, up from 53.1 in November, marking the 16th consecutive month in which the index has posted above the 50.0 mark. In addition, December saw the strongest monthly rise in services business activity since April 2023.
‘Impressive figures’
“These are impressive figures for the end of the year,” commented Jonas Feldhusen, junior economist at Hamburg Commercial Bank. “The HCOB Composite PMI for Spain significantly increased in December, primarily driven by strong results in the services sector. Manufacturing also showed solid growth. Given these positive developments, it is quite realistic to expect that Spain’s economic growth could reach 3% in 2024.”
Businesses in the services sector attributed the upturn in performance to ‘strong underlying demand’, the report noted, while there was also a normalisation of activities following the DANA (Depresión Aislada en Niveles Altos) weather phenomenon.
New business volumes reported a sharp increase in December, which was supported by a return to rising new export sales.
Confidence boost
Looking ahead to the coming year, services sector confidence strengthened in December, with optimism at its highest level since May 2024. Businesses are also hopeful of a more stable macroeconomic climate during 2025, backed by improved sales demand.
“Foreign orders have increased again after a decline in the previous month, likely due to increased tourism activities from neighbouring European countries, as anecdotal evidence suggests,” Feldhusen added. “The increased activity and new orders are resulting in more work. Companies are therefore trying to hire additional workers to cope with the workload.
“Prices remain elevated. Both costs for companies and prices charged rose in December. The cost pressure on companies is increasing due to higher wages and rising fuel prices. Looking at the entire history of the PMI price component, it is noticeable that neither input costs nor output charges have settled at levels before the inflation shock. This could indicate that the problem of service inflation could worsen again. We expect that the inflation rate in Spain will rise to just under three percent in December, further diverging from the ECB’s target.” Read more here.
