The activity of Spanish companies It continued to deteriorate in October, weighed down by weak demand and high prices, according to the S&P Global PMI index for the Spanish services sector. Specifically, the Composite Purchasing Managers Index fell to 48 points from 48.4 the previous month, which is the worst reading since last January.
In the loss of activity registered in the tenth month of the year, the deterioration of the Manufacturing sectorwhose PMI fell to 44.7 points from 49 in September, its worst reading since May 2020. For its part, the PMI for service sector slowed the pace of contraction, with 49.7 points in October compared to 48.5 the previous month, although it is still below the 50 points that separate growth from contraction. Both sectors fell for the second consecutive month.
This drop in activity was due to the drop in sales and new orders in the face of the current uncertainty about inflation and a possible recession, which delayed the purchase decisions of companies and households.
In this way, amid the reduction in demand and production needs, the level of employment in the private sector decreased for the second consecutive month. This decline reflected a sharp decline in manufacturing employment, while service companies posted marginal growth in headcount.
However, Paul Smith, an economist at S&P Global Market Intelligence, explained that in a context of high inflation and unusually high levels of uncertainty about the economic outlook, it is understandable that downward pressure on activity in the Spanish service sector continued. in October.
“It’s no surprise that businesses remain hesitant to think about future activity, so confidence in the outlook is subdued again as we head towards the end of the year,” he said.