Growth remained marked in the Spanish service sector during August.
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Although rates of expansion in business activity and new orders both eased, the rate of job creation was the strongest since prior to the global financial crisis.
Higher staff costs led to a faster pace of input price inflation, while companies continued to raise their output prices modestly.
Service providers remained confident that activity will rise over the coming year, despite sentiment easing.
The headline seasonally adjusted Business Activity Index posted 56.0 in August, down from 57.6 in July and signalling the weakest rise in service sector output since January.
That said, activity continued to increase at a sharp pace, with growth recorded for the forty-sixth successive month.
Respondents indicated that higher new orders was the main factor leading activity to rise.
Sector data indicated a broad-based expansion of activity, with the fastest increases seen in Financial Intermediation and Post & Telecommunications.
New business has increased continuously for more than four years, with August seeing a substantial monthly expansion that was little-changed from July.
Data suggested that rising new business added to capacity pressures in the sector, with backlogs of work increasing for the seventh successive month.
The rate of accumulation eased, however, from July’s two-year high, and was the weakest since May.
Companies took on extra staff in order to deal with additional workloads.
The rate of job creation quickened to the fastest in more than a decade as one-in-five panellists raised employment.
The Financial Intermediation sector signalled the fastest increase in staffing levels, with only Post & Telecommunications recording a drop in employment.
Panellists reported that higher staff costs was the main factor behind rising input prices in August.
Cost burdens increased to the greatest extent in four months, with inflation slightly faster than the series average.
Meanwhile, companies raised their output prices modestly.
Anecdotal evidence suggested that charges were increased partly in response to higher input costs, but also due to strengthening client demand.
Rises in charges were widespread across the sectors covered by the survey, with the most marked increases in Post & Telecommunications and Hotels & Restaurants.
Planned product launches and predictions of improvements in economic conditions supported optimism that activity will increase over the coming year.
That said, sentiment eased for the third month running and was the lowest since September last year. ■