The Spanish service sector registered a noticeable slowdown in growth of activity during April amid reports that political uncertainty had led to some projects being put on hold.
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New business growth also softened, whilst confidence about the future slumped to its lowest level since mid-2013.
Nonetheless, companies took on additional staff at a faster rate, albeit at the price of raising average salary costs which in turn led to another noticeable increase in operating expenses.
After accounting for seasonal factors, April's headline Business Activity Index registered a level of 53.1.
Although indicative of solid growth, the index was well down on March's 56.8 and the lowest reading recorded for seven months.
There were a number of reports from panellists that political uncertainties had led to the postponement of several projects in April and also weighed on optimism about the future.
Although firms remain on average optimistic regarding activity levels in 12 months' time, confidence was at its lowest level in over five-and-a-half years.
Nonetheless, wider market activity was widely reported to have held up well during the latest survey period and resulted in another marked gain in new business volumes.
Although growth was not as strong as March's ten-month high, it remained comfortably above the survey's long-term trend.
Growth was, however, skewed to the domestic market.
Although new business volumes from abroad rose for the second time in the past three months, they did so only marginally.
Meanwhile, there was evidence of rising capacity pressures during the latest survey period.
Backlogs of work increased modestly, but nonetheless at the strongest pace recorded by the survey since November 2018.
Companies reported that higher overall workloads continued to reflect the positive flow of incoming new business.
In response, firms continued to take on additional staff.
April's survey showed another strong gain in employment, with growth reaching its highest level since last July.
Moreover, jobs growth has now been recorded continuously for just over four-and-a-half years.
Taking on additional staff reportedly added to cost burdens during April, with average salaries said to be higher than in March.
With reports also of higher fuel costs, overall operating expenses were reported to have increased again at a noticeable rate.
A number of service providers sought to protect margins by raising their own charges.
However, competitive pressures meant that the degree to which charges rose was the weakest in 2019 so far. ■