Spain December services PMI 57.1 vs 54.5 expected

• Prior 55.6
• Composite PMI 55.6
• Prior 55.1

The headline reading is a 12-month high and reflects a divergence in trend in Spain’s manufacturing and services sectors. The latter continues to post solid growth, with this being the 28th straight month of the PMI estimate keeping above the 50.0 threshold. A solid increase in new business and commercial work is helping to underpin the momentum in December.

That being said, inflationary pressures picked up on the month with input prices rising at its quickest pace since September. So, this will be a sticking point and one that could become a bit of a concern for the ECB if it continues to keep up; alongside Germany that is.

HCOB notes that:

“Spain’s private sector economy closed the year on a strong note, driven primarily by the services sector. While services
maintained its growth momentum, manufacturing continued to lose steam. This sectoral divergence can be traced to several
factors: external headwinds such as intensifying competition from China, continued trade frictions, and the economic
weakness persisting in key partner countries – most notably Germany and France – are weighing on industry. In contrast,
domestic strength, supported by a labour market bolstered through immigration, is underpinning services.

“Price dynamics also reflect these contrasting demand conditions. In markets with robust demand, prices tend to rise more
sharply, whereas weaker demand keeps price growth subdued. On average in 2025, output prices in manufacturing
remained flat—quite the opposite of services, where prices climbed well above their historical trend. Elevated services
inflation, fuelled by demand but also strong wage growth, was also a key topic at the latest ECB meeting and remains a
source of concern for policymakers.

“Looking ahead to 2026, the outlook for services remains upbeat: order books are solid, and recent data suggest that last
month’s dip in export orders was likely a temporary blip. Companies are responding by expanding their workforce, with a
notable increase in permanent contracts, a clear sign of confidence in medium-term demand.”

This article was written by Justin Low at investinglive.com.