.jpg)
This marks a return to growth in Spain’s manufacturing sector, bolstered by marginal gains in production and new orders. Employment conditions were also positive while business confidence improved to its highest level in two years. HCOB notes that:
“The Spanish manufacturing sector appears to be breaking free from the downward trend. Output, following its broad
stabilisation at the turn of the year, experiences further enhancement, growing for the first time since April 2023. And driven
by a surge in domestic demand, order inflows indicate growth for the first time in 11 months. On the contrary, a growth
impulse is yet to materialize in the overall foreign environment due to the economic weakness of key trading partners. The
associated index for new export orders continues to show contraction, albeit at a slower pace.
“In tandem with the improved order situation, production has also rebounded. After nine months of continuous contraction,
the corresponding output index signals mild growth for the first time. In parallel with the positive developments in the
consumer goods sector, the capital goods industry has grown for the first time in eight months. The development has been
propelled by the expansion of production and an influx of new orders, leading to a boost in output expectations.
“Challenges persist in the Red Sea, disrupting global trade routes and leading companies to grapple with longer delays in
delivery times. As a consequence, businesses were compelled to tap into existing inventories to meet heightened production
demand. Although freight costs contribute only a modest fraction to input costs, input prices have edged upward for the first
time in a year.
“Manufacturers are becoming optimistic about the future. Buoyed by production and new orders, hiring, and purchasing
activity have returned to the growth zone. The newly created jobs align with the heightened business expectations of
manufacturers, which have improved significantly and now exceed the long-term historical average.”
