- Prior 53.5
The headline estimate misses on expectations but still reaffirms an expansion in Spain's services sector to start the year. That being said, the rate of growth is the weakest since June last year. That amid reports of softer demand and cooler market conditions. Adding to that, employment also rose to a lesser degree, with some evidence of firms not replacing leavers as expectations about the future softened to their lowest for six months.
On the prices front, cost pressures are seen intensifying as input price inflation accelerated to its highest level in a year. So, that's something to be wary about.
HCOB notes that:
“The Spanish private sector economy is continuing to lose growth momentum, with the HCOB Composite PMI posting at the lowest level since May 2025. The modest impetus is a result of weaker services-sector business activity growth combined with a contraction in manufacturing output.
“The service sector is losing steam. This applies both to demand-driven business activity and to new orders, as well as hiring intentions. Several panellists report that market demand has been cooling since the beginning of the year. This effect is especially visible in foreign new business, which has declined in three out of the last four months. Foreign clients appear increasingly cautious to spend in the face of heightened macroeconomic uncertainty.
“Looking ahead, the current slowdown is beginning to weigh on corporate expectations. The future confidence index dropped sharply and now sits below its historical average. This deterioration is consistent with slower hiring activity, with some firms choosing not to replace departing staff due to the softer growth backdrop. At the same time, outstanding business continues to decline, offering further evidence of weakening activity levels.
“Price dynamics remain a point of concern in Spain’s services economy. Input price inflation, which is strongly influenced by wage pressures, accelerated to its fastest pace in a year. These cost increases are being passed where possible directly through to output prices. Although the euro area has avoided a wage‑price spiral in the aftermath of the pandemic and the Russia‑Ukraine conflict, signs persist that this risk remains more pronounced in the Spanish economy.”
