Spain's Manufacturing Growth Eases as Supply Chain Delays Intensify, PMI Finds
Spain's Manufacturing Sector Performance in May
Modest Expansion Amid Rising Supply Chain Disruptions
MADRID, June 1 (Reuters) - Spain's manufacturing sector expanded modestly in May, at a slightly slower pace than in April, as disruptions linked to the Middle East conflict worsened supply delays, raised costs and weighed on demand, a business survey showed on Monday.
In the survey by S&P Global, the country's Manufacturing Purchasing Managers' Index (PMI) fell to 51.2 in May from 51.7 in April. The 50-mark separates growth from contraction.
Expert Commentary on Sector Trends
"May indicated a partial reversal of last month's safety stock-driven manufacturing sector growth," said Paul Smith, Economics Director at S&P Global Market Intelligence.
"This was linked to the dual forces of elevated prices and ongoing uncertainty, which were seen by manufacturers as negatively impacting client budgets and resulting in a drop in their sales over the month," Smith added.
Output, Demand, and Export Performance
Output and New Orders
Output rose for a second month, but only marginally and at a weaker pace than in April. Respondents linked the slowdown to weaker incoming demand after new orders fell for the fifth time in six months.
Export Demand Trends
Export demand also remained under pressure. New export orders declined for a ninth straight month, although the rate of contraction was the weakest since February.
Employment and Supply Chain Issues
The pace of job cuts was marginal and the weakest since February.
Supply Strains and Price Inflation
Supply strains intensified sharply. Vendor performance deteriorated to the greatest extent in four years, while input price inflation hit a four-year high.
Business Confidence and Economic Outlook
Confidence Levels and Risks
Confidence improved to a three-month high from March's near two-and-a-half-year low, but remained below its historical average as firms cited geopolitical uncertainty, weak demand and the risk of further price rises.
Government Economic Forecast
The government expects the Spanish economy, which is among the top performers in Europe, to expand 2.2% this year after 2.8% in 2025, although it has acknowledged that the war in the Middle East could weigh on the forecast.
(Reporting by David Latona; Editing by Andrei Khalip and Toby Chopra)
