It’s the first time since January that Spain’s manufacturing sector records growth in activity. Output also turned positive while the fall in new orders on the month was much slower. There were positives all around with a renewed uptick in confidence and improvements in employment conditions as well. HCOB notes that:
“Spain’s manufacturing sector sent encouraging signals in May. After three consecutive months of contraction, the HCOB
Manufacturing PMI rebounded significantly, once again surpassing the growth threshold. Whether this improvement is partly
attributable to early signs of easing in the global tariff conflict remains uncertain. While Spain’s direct dependence on the
U.S. market is relatively limited compared to countries like Germany or Italy, indirect effects from a generally improved global
trade outlook may also be contributing.
“Production momentum is gaining strength. Both demand and output showed a positive trend in May. Improved sales
conditions helped revive production activity following a decline in the previous month. Although new orders continued to fall,
the pace of decline suggests a stabilization. In line with this, companies slightly increased their inventories of intermediate
goods—an indication that they anticipate further production expansion in the coming months.
“Price pressures are easing. Prices in the manufacturing sector declined in May, driven by a combination of falling raw
material costs and still-muted demand. The drop in input prices was passed on to customers, resulting in lower output
prices.
“Employment in Spain’s manufacturing sector has remained largely stable so far this year. However, the HCOB PMI
signalled a slight improvement in May. Given the increase in backlogs and more optimistic business expectations, a
significant deterioration in employment appears unlikely in the short term. Anecdotal evidence suggests that many firms are
counting on an improving economic environment in the coming year—particularly in Europe. Monetary easing by the ECB
and fiscal stimuli—such as Germany’s economic support package—could generate positive spillover effects across the
eurozone. Nevertheless, the erratic trade policy of the U.S. under President Trump remains a source of uncertainty,
continuing to limit global planning reliability.”
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