Spain's private sector continued its expansionary trend in January 2025, although the pace of growth moderated somewhat compared to the robust figures seen at the end of the previous year.
Spain PMI eases, but new orders surge
The HCOB Spain Composite PMI slipped to 54 from a more than 18-month high of 56.8 in December, indicating a solid, but less rapid, rate of expansion. This slowdown was driven by a notable deceleration in the manufacturing sector (PMI at 50.9, down from 53.3), which saw growth nearly stall, coupled with a slightly softer expansion in the service sector (PMI at 54.9, down from 57.3). Encouragingly, new business orders across the private sector accelerated, reaching their highest level since November 2021, largely thanks to strong performance in the service sector. The labor market continued to be a bright spot, with employment growth reaching its fastest pace since January 2007.
Spain: hiring boom, but backlogs and inflation rise
However, this rapid hiring has yet to alleviate capacity constraints, as backlogs of work increased sharply. On the price front, inflationary pressures intensified, with operating cost inflation climbing to its highest point since February 2024. This surge in input costs led to continued strong growth in output prices, suggesting that inflationary pressures remain a concern for Spanish businesses.
