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Spain’s manufacturing sector sustains a slight growth in March, helped by stronger output despite a softer increase in new orders. Prices remain a bit of an issue though, with the rate of inflation still seen at its highest since February 2023. But compared to the rest of the region, Spain at least is doing quite well off. HCOB notes that:
“Is Spain actually part of the eurozone? Of course, but if you look at the manufacturing sector, you might think it is not. After
all, while industry in the eurozone has been languishing for well over a year-and-a-half, the situation in Spain has picked up
for a second month in a row. In addition, the recession in Spain has also been much shallower than in the monetary union as
a whole. With respect to the manufacturing sector and considering the PMI, our GDP Nowcast model calculates a solid
growth rate of 1% in the first quarter, a number the Eurozone could only dream of.
“It is encouraging that not only did production increase in February and March, but also that more orders were received in
both of these months. The momentum here still leaves something to be desired, but at least this marks the end of a 10-
month dry spell during which orders fell. In line with this, order books were also supported most recently by more orders from
abroad. Moderate production growth should therefore also be possible in the coming months.
“Employees in Spain can be pleased. This is because companies in the manufacturing sector have been hiring again since
February and have recently even stepped up a gear. However, in parallel with the increase in employment, input prices
faced by manufacturers rose in March at a slightly faster pace. On the sales side, however, companies were still forced to
reduce prices, even if they could reduce them slightly less than in the previous month.
“The moderate recovery is unevenly distributed. Relatively strong momentum has already been observed in the consumer
goods sector for several months. The intermediate goods industry only just moved back into expansionary territory in March.
In capital goods, on the other hand, the situation has deteriorated again after a surprising recovery was observed in
February. However, the multi-month trend of the corresponding PMI index continues to point upwards here too.”
