Spain’s final services PMI rose from 48.5 in the previous month to 50.4 in August, exceeding analysts’ forecast of 49.5 and putting an end to the services sector’s two-year tightening, according to the Markit Economics data. The positive final services PMI reports were assisted by the debt crises dragging Spain’s economy for more than two years.
Apart from the positive final manufacturing PMI reports indicating a growth in Spain’s industry sector, the report also shows the sector rose above the 50 threshold to 51.1, up from 49.8 from the previous month.
“The news from the Spanish manufacturing sector improved again in August, with PMI data highlighting a first rise in output for 28 months. As has been the case in recent months, exports were the key source of positive momentum as growth quickened sharply. Firms appear still to doubt the sustainability of the current improvements, however, opting to raise output only modestly and often using existing stocks to meet new order requirements”, Andrew Harker, economist at Markit, stated in the report.
Spain’s GDP
Spain’s gross domestic product (GDP) declined 0.1% in the second quarter as analysts predicted, after a 0.5% drop in the first quarter, reports from the National Institute of Statistics confirmed.
Annually, the gross domestic product contracted 1.7%, down from 2.0% in the previous quarter. The fall was caused by the weak domestic demand. Analysts are predicting the country’s economy could get hit be recession again this year due to the fall in consumer and investment spending and high unemployment figures.
The Spanish government’s finance is expected to go under more pressure due to the fall in the economic output. The government’s gross debt is predicted to reach 101% of GDP by 2014 after an estimated government debt ratio of 88.4% of GDP in 2012, according to forecasts from the European Commission (EC).
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