Output growth in Spain eases, but new orders continue to rise sharply
Staff Writer |
Spanish manufacturers recorded a further marked improvement in business conditions at the end of the first quarter of the year.
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Although the rate of output growth slowed from February, it remained marked amid another sharp increase in new orders.
The easing in the rate of expansion of output contributed to one of the strongest rises in backlogs of work since the series began, while supply issues were again highlighted by a marked lengthening of suppliers’ delivery times.
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.
The PMI was at 54.8 in March, down from 56.0 in February, but still pointing to a marked improvement in business conditions.
Manufacturing firms registered a sharp rise in new business in March, extending the current sequence of expansion to 20 months.
New export business also increased, albeit at the weakest pace in seven months.
The rate of growth in output also eased in March and was the slowest since August last year.
The rise was still marked, however, and extended the current sequence of expansion to 52 months.
The slowdown in the pace of output growth was central to a sharp accumulation of outstanding business.
In fact, the rate at which backlogs increased was the second-fastest since the series began in August 2002.
Capacity pressures were also evident in supply chains amid reports of a shortage of raw materials.
Suppliers’ delivery times lengthened substantially.
Rising output requirements led firms to increase their employment and purchasing activity during March.
In both cases rates of expansion eased from those seen in February, but remained solid nonetheless.
Higher purchasing activity resulted in a solid increase in pre-production inventories.
In fact, the latest rise was the strongest since July 2000.
Stocks of finished goods also rose at a faster pace in March.
Although input prices continued to rise sharply over the month, the rate of inflation eased markedly and was the slowest since July 2017.
Panellists reported higher costs for raw materials such as food, fuel and metals.
Spanish manufacturers responded to higher input costs by raising their selling prices.
The rate of charge inflation was solid, but eased for the second month running to the weakest in six months.
Business confidence remained strongly positive in March, and was little-changed from that seen in February.
Predictions of increases in output reflected optimism around economic conditions and new order growth. ■