Spain and Italy, the only large Eurozone economies where services activity is expanding


Link Securities| S&P Global reported on Monday that Spain’s services sector purchasing managers’ index, the services PMI, rose in its January reading to 52.1 points from 51.5 points in December, falling short, however, of the 52.5 points expected by FactSet consensus analysts.

January’s reading is the highest reading for this leading indicator of activity since last July. Any reading above 50 points suggests expansion in activity relative to the previous month, and below that level, contraction.

As the analysts at the consultancy that compiles the index point out in their report, the pace of expansion of activity in the Spanish services sector improved in January amid reports of strengthening market conditions and higher sales. Employment growth also picked up, accelerating to its best level since May 2023, as companies tried (generally unsuccessfully) to keep up with their growing workloads. There was also greater confidence about the future, but price pressures intensified: both purchase and selling prices rose in January and did so at a stronger rate than at the end of last year.

Assessment: Spain is, along with Italy, the only one of the large Eurozone economies where services activity is expanding. While this is very positive, we will have to keep an eye on price developments, as upward pressure on prices in the sector seems to have intensified in January.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.