Spain manufacturing expands for second straight month

The HCOB Spain Manufacturing PMI rose to 51.4 in June 2025, surpassing both market expectations and May’s reading of 50.5. This marked the highest reading so far this year and represented the second consecutive month of modest expansion in Spain’s manufacturing sector.

The improvement was largely driven by a solid rise in production levels—the strongest increase since last December—as factories ramped up activity following a period of slower growth. Additionally, new orders returned to growth territory after four months of contraction, signaling a tentative recovery in domestic demand.

However, the report highlighted continued challenges on the export front, with new export orders falling again amid ongoing tariff-related uncertainty and global trade tensions. Foreign demand remained subdued, weighing on overall growth prospects for manufacturers reliant on international markets. Despite these headwinds, employment in the sector continued to rise, though job creation remained modest as firms exercised caution amid uncertain economic conditions.

Companies also showed restraint in their purchasing behavior, often opting to draw down on existing inventories rather than increase new input orders, due in part to persistent delivery delays and concerns over global supply chain disruptions. Reflecting weaker demand conditions and a stronger euro, input prices declined for the second consecutive month. This easing of cost pressures was mirrored in output prices, which also fell as manufacturers sought to maintain competitiveness by reducing charges to customers.

Despite the ongoing global risks, sentiment among Spanish manufacturers improved notably, with business optimism reaching a four-month high. This renewed confidence was underpinned by expectations of new product launches and planned capacity investments, suggesting that many firms are cautiously preparing for a more favorable operating environment in the months ahead.