- Prior 49.7
A decline in new orders weighed on Spain’s manufacturing sector last month, resulting in a marginal contraction. Output showed an increase though and employment levels also improved. So, there are some positive takeaways. HCOB notes that:
“The HCOB PMI slightly deteriorated in March due to decreasing order volumes and the reduction of inventory levels.
Panellists reported increased client uncertainty following the erratic tariff announcements, leading to the postponement of
deals. This negatively affected purchasing and inventories, as the lack of new work encouraged firms to buy fewer inputs.
Overall, these subdued conditions are also weighing heavily on the business outlook, which declined significantly in March.
“Orders are declining, and inventories are being reduced, but it is not all negative for Spain’s manufacturing sector.
Production is still increasing, and manufacturers are continuing to increase staff levels, although the degree of improvement
in these subcategories is rather small. However, if the latest trend continues and underlying demand remains subdued, there
is a definite possibility of large-scale cuts in production and employment, similar to what is happening in other European
countries. The increased long-term yields following Germany’s announcement of new debt of around one trillion euros could
further negatively impact investments.
“Prices in manufacturing remain in comfortable areas. Both input and output prices indicate slight inflation, with inputs below
and outputs around their long-term average increases. Metals are a driver of input cost inflation, but when it comes to prices
charged, there was limited room for increments as competition and weaker demand weighed on pricing power.
“Manufacturing sub-sectors are showing a somewhat mixed picture. Consumer goods is improving due to solid output
growth. However, operating conditions in the intermediate and investment goods sectors are more limited, especially in the
latter, which has deteriorated for the third consecutive month. This could be interpreted as Europe’s automotive crisis
transmitting to Spain, as autos are incorporated into the investment goods sector.”