Spain: business activity rises at fastest pace in seven months

According to the report from IHS Markit, the headline Business Activity Index rose to 54.7 in January from 54.0 in December. The latest reading signalled a marked monthly rise in activity that was the greatest since June last year. Services activity has now increased in each of the past 63 months, with panellists linking the latest rise to higher new orders.

The Transport & Storage sector again posted the sharpest increase in activity of the broad sectors covered by the survey, with only Hotels & Restaurants signalling a reduction. Although new business continued to expand in January, the rate of expansion eased to a 25-month low. New export orders decreased for the sixth successive month, albeit marginally. Outstanding business rose only fractionally at the start of 2019, with the latest accumulation the weakest in the current nine-month sequence of increasing backlogs. Service providers increased their staffing levels at a sharp and accelerated pace amid rising demand and the securing of new clients. The rate of job creation was the fastest since July last year. Companies took on extra staff amid improving sentiment regarding the 12-month outlook for activity.

Input costs continued to rise at a sharp pace in January, and one that was above the series average. This was despite the rate of inflation softening to a four-month low. Where input prices increased, panellists often linked this to higher staff costs. Service providers responded to increases in input costs by raising their output prices accordingly. Charges were up for the ninth month running, and to the greatest extent since March 2018.