Growth momentum in the Spanish manufacturing sector improved in February, with both output and new orders rising at faster rates than at the start of the year.
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Linked to this were further sharp increases in employment and purchasing activity.
Meanwhile, higher raw material costs resulted in a further sharp increase in input prices, with output charges also continuing to rise.
The headline IHS Markit Spain Manufacturing PMI is a composite single-figure indicator of manufacturing performance.
It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.
Any figure greater than 50.0 indicates overall improvement of the sector.
At 56.0 in February, the PMI was at a level indicative of a strong monthly improvement in the health of the manufacturing sector.
Moreover, the index rose from 55.2 in January and signalled the most marked strengthening of business conditions in three months.
Central to the latest improvement in operating conditions was a sharp and accelerated increase in new business.
The rate of expansion was the fastest in 13 months, with panellists reporting higher new orders from both domestic and export customers.
New business from abroad also increased at a marked pace during the month.
Higher new business fed through to a fifty-first consecutive rise in manufacturing production, and one that was slightly faster than seen in January.
The strength of new order inflows also contributed to an accumulation of outstanding business, which increased solidly.
Manufacturers continued to raise their staffing levels at a sharp pace during February in line with higher output requirements.
The rate of job creation was broadly in line with that seen in January.
Purchasing activity also increased in line with production growth, but the latest sharp expansion of input buying was also partly linked to stock building.
Stocks of purchases rose for the sixth month running, as was the case with inventories of finished goods which were supported by a strong rise in output.
Rising prices for raw materials led to a further sharp increase in input costs.
Steel was widely mentioned as costing more during February.
Manufacturers passed on higher input prices to their customers, resulting in a further solid monthly increase in output prices.
That said, the rate of inflation eased slightly from the start of the year.
Vendor delivery times lengthened amid further pressure on supply chains.
Lead times lengthened markedly, albeit to the least extent in three months.
Strong optimism regarding the prospects for output growth over the coming year was recorded again in February, linked to predictions of new customers and increasing export business. ■