Finance
Spain's Service Sector Growth Slows in January, PMI Shows
Published by Global Banking & Finance Review®
Posted on February 4, 2026
2 min readLast updated: February 4, 2026
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Spain's service sector growth slowed in January, with PMI at 53.5. Despite weaker demand, employment growth hit a 10-month high, and business confidence improved.
Spain's Service Sector Growth Slows to Lowest Rate Since August
Overview of Spain's Service Sector Performance
MADRID, Feb 4 (Reuters) - Growth in Spain's service sector eased in January, a survey by S&P Global showed on Wednesday, marking its slowest expansion since last August as firms faced a slowdown in demand growth.
The HCOB Spain Services Purchasing Managers' Index fell to 53.5 in January from 57.1 in December, signalling continued growth but at a weaker pace. PMI readings above 50 indicate growth, while those below point to contraction.
Employment growth, meanwhile, reached its highest level in 10 months, as companies recruited additional staff to manage both new and existing contracts.
Employment Trends
"Despite the slowdown in January, firms remain confident about the business outlook for the year ahead," said Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank.
"This optimism is also mirrored in hiring intentions: companies anticipate a higher workload and continued growth and are therefore seeking to expand capacity," Feldhusen added.
Inflation and Pricing Strategies
New business growth softened to its slowest since last June, with export sales declining for the second time in three months. Service providers noted weaker sales to key European markets at the start of 2026.
Meanwhile, input cost inflation remained elevated, driven by rising supplier charges and increased labour expenses, prompting service providers to raise their own prices at a quicker pace.
Business Confidence Outlook
The composite PMI, which includes both services and manufacturing sectors, fell to 52.9 in January from 55.6 in December, indicating the slowest growth in seven months.
Despite the downshift, business confidence improved to a 12-month high, with firms expecting demand to pick up in the near term.
(Reporting by David Latona; Editing by Joe Bavier)
Key Takeaways
- •Spain's service sector growth slowed in January.
- •PMI dropped to 53.5 from 57.1 in December.
- •Employment growth reached a 10-month high.
- •Input cost inflation remains elevated.
- •Business confidence hits a 12-month high.
Frequently Asked Questions about Spain's service sector growth slows in January, PMI shows
1What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI) or the Producer Price Index (PPI).
2What is business confidence?
Business confidence is the level of optimism or pessimism that business leaders feel about the prospects of their companies and the economy. It influences investment decisions and economic growth.
