Spain manufacturing sector suffers "temporary setback" in September

Spain's manufacturing economy remained in expansion in September, though growth slowed to its weakest since June, according to purchasing managers' index data published Wednesday.

The Hamburg Commercial Bank Spain manufacturing PMI fell to 51.5 points in September, remaining above the 50-point threshold that separates growth from decline, but fading from August's reading of 54.3 points. The September reading also was below the FXStreet-cited market consensus of 53.9 points.

It is the fifth successive month that Spain's factories have been in expansion, but the "slowest growth since June".

"The fall in the PMI reflected weaker gains in both output and new orders. Notably, the rise in production was the softest for four months. Despite weakening, new order book growth remained solid amid reports of firm demand and new product introductions. However, growth was broadly confined to domestic clients as latest data showed a decline in new export orders for the first time in three months. Tariffs and political uncertainty in key markets reportedly restricted export demand," survey publisher S&P Global said.

"Some instability in the outlook meanwhile weighed on company expectations. Although on average firms are forecasting an improvement in production from present levels, confidence was down on August's six-month high. An uncertain outlook and slower growth in current new orders meant several firms chose not to replace leavers and renew employee contracts in September. The result was a modest decline in staffing levels for the first time in seven months."

Input prices rose, for the third-successive month, though at a pace that was "only modest".

Hamburg Commercial Bank analyst Jonas Feldhusen said Wednesday's PMI reading shows Spain's factory sector "is facing a temporary setback".

"Although the sector's growth momentum decelerated, the broader upward trend seems to remain intact. In line with the headline index, manufacturing output softened, though it's important to note that August saw an unusually strong rise in production. Against this backdrop, the current slowdown should not be over-interpreted," Feldhusen said.

The PMI survey features a panel of around 400 manufacturers in Spain. Responses were collected in the second half of September. The composite and service sector readings are due out on Friday.