Finance
Spain Services Sector Grows but Costs Soar, Confidence Weakens Amid War, PMI Shows
Published by Global Banking & Finance Review®
Posted on April 7, 2026
2 min readLast updated: April 7, 2026
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Spain’s services sector grew in March (PMI at 53.3), but demand softened, input costs surged to their fastest in nearly three years, and business confidence weakened amid Middle East war uncertainty, while employment and backlogs rose modestly.
Spain's Services Sector Expands but Faces Rising Costs and Uncertainty
March 2024 Services Sector Performance Overview
MADRID, April 7 (Reuters) - Spain's services sector expanded faster in March but demand softened, costs rose at the fastest pace in nearly three years and confidence weakened amid the war in the Middle East, a business survey showed on Tuesday.
Key Survey Results
The Spain Services PMI Business Activity Index rose to 53.3 in March from 51.9 in February, according to the survey by S&P Global. The 50-mark separates growth from contraction.
Rising Costs and Inflation Pressures
"Services firms are seeing big spikes in their energy and fuel bills," said Paul Smith, economics director at S&P Global Market Intelligence. "With output charges also rising markedly, firms are understandably worried about the impact that high prices will have on spending in the near-term," he said.
"How growth will develop in the coming months will be very much dependent on the duration of the war in the Middle East."
Input Costs and Output Charges
Input cost inflation accelerated to its fastest pace since April 2023, driven by rising energy and fuel bills and higher salaries. Companies raised output charges at the fastest pace since August 2025, though the increase was slower than for input costs.
Demand, Exports, and Confidence
New business increased at the weakest pace in nine months, while new export business fell for a third straight month and at the sharpest rate since January 2024.
Confidence in future activity dropped to its lowest since September 2023. Firms cited uncertainty over the Middle East conflict, and worries that higher inflation would hurt spending, the survey showed.
Employment and Activity Trends
Employment still rose solidly, extending a growth run of three-and-a-half years, and backlogs of work increased for the first time in four months, albeit only marginally.
The survey said average services activity in the first quarter was notably weaker than in the final three months of 2025.
Composite PMI and Sector Comparison
Spain's composite PMI rose to 52.4 from 51.5, with services offsetting a second straight monthly decline in manufacturing output.
(Reporting by David Latona; Editing by Hugh Lawson)
Key Takeaways
- •Services PMI rose to 53.3 in March from 51.9 in February, indicating expansion despite softer demand.
- •Input cost inflation hit its fastest pace since April 2023, led by soaring energy, fuel, and wage costs.
- •Business confidence fell to its lowest since September 2023 amid Middle East war-related uncertainty; new export business shrank and output charges rose.
References
Frequently Asked Questions about Spain services sector grows but costs soar, confidence weakens amid war, PMI shows
1How did Spain's services sector perform in March?
Spain's services sector expanded in March with the PMI rising to 53.3 from 51.9 in February, indicating growth.
2What factors contributed to rising costs in Spain's services sector?
Rising energy and fuel bills, along with higher salaries, drove input cost inflation to its fastest pace since April 2023.
3How has the Middle East conflict affected business confidence?
The war in the Middle East has weakened business confidence, with firms expressing uncertainty about future activity.
4What changes occurred in new business and export orders in March?
New business increased at the weakest pace in nine months, and new export business fell for the third consecutive month.
5Did employment in the services sector increase?
Yes, employment continued to rise solidly, extending a growth run of three-and-a-half years.