Spain service sector shines in September on more "new business gains"

Spain's service sector expanded again in September, aided by the fastest rise in new work since January, numbers on Friday showed.

The service sector expansion helped support the wider private sector, which saw growth quicken despite the manufacturing purchasing managers' index retreating.

The Hamburg Commercial Bank's services PMI rose to 54.3 points in September, from 53.2 in August, and defying the FXStreet cited forecast of a decline to 53. A reading above 50 points suggests the sector is in expansion, so the latest reading showed growth accelerated.

"Growth was also again above the survey's long-term trend and has now been sustained on a continual monthly basis for just over two years," survey publisher S&P Global said.

"Supporting the rise in activity was another month of new business gains. Growth was steep, accelerating since August to its highest since the start of the year. Service providers pointed to positive demand conditions and success in securing new customers. However, latest data implied that growth was primarily led by domestic sources; although new export business rose in September for a third month in a row, it did so only marginally amid reports of soft tourism demand."

The survey showed that new work expanded at the fastest pace since January, while business expectations were optimistic, spiking to the loftiest level since March.

"Firms are hopeful that demand will continue to strengthen, and many signalled plans to expand both service ranges and commercial activities in the year ahead," S&P Global added.

"On the price front, staffing costs were reported as a key driver of higher overall operating expenses in September. Although a little softer than August's six-month high, input cost inflation remained sharp and historically elevated. As well as increased payroll expenses, firms indicated a further general upturn in supplier prices."

The wider composite PMI, measuring the private sector economy and calculated using a weighted average of the services and earlier manufacturing reading, edged up to 53.8 in September from 53.7 in August.

"Both broad sector categories registered higher output, although manufacturing saw a noticeable slowdown in growth on the month," S&P Global added.

The 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.

On the wider private sector, S&P Global said: "The fastest rise in composite new work for eighth months was recorded in September, underpinned by a stronger increase in service sector new business. Staffing levels also increased, albeit exclusively in services as manufacturing payroll numbers declined modestly. Input price inflation remained elevated, whilst selling charges continued to rise but at the slowest pace in four months. Confidence in the outlook was positive and slightly above its trend level."

The services PMI features a panel of around 350 firms, with responses collected between September 11 and September 25.