Spain December manufacturing PMI 49.6 vs 51.0 expected

Prior 51.5Spain’s manufacturing sector slid back into contraction territory for the first time since April amid falls in both output
and new orders. Softer demand conditions are to blame but manufacturers also chose not to renew
temporary labour contracts, resulting in the biggest monthly fall in employment for two years. HCOB notes that:“Spain’s manufacturing sector saw an unexpected setback in December. Both output and new orders slipped below the
growth threshold for the first time since spring. This signifies a shift after a period of steady resilience, suggesting that
underlying downward pressures may finally be catching up. Despite this pullback, the industry remains more resilient than its
German or French counterparts, though the latest trend raises some concerns.
“Whether Europe’s broader industrial malaise will spill over into Spain in a lasting way is still unclear. Our survey responses
suggest that production cuts were driven by softer demand and inventory adjustments. Interestingly, business expectations
for the months ahead improved despite the current weakness, hinting that December’s decline may be a temporary dip
rather than the start of a prolonged downturn.
“External demand is becoming a growing risk. Weakness among key European partners, rising fragmentation in global trade,
and competitive pressure from China are weighing on export orders. Adding to the challenge is a relatively strong euro,
frequently cited as another drag on demand. This combination of headwinds, coupled with a bunch of falling raw material
prices in December, has eased input costs but also intensified pricing pressure. Many firms have been forced to cut selling
prices to support volumes, an environment that continues to squeeze margins.”
This article was written by Justin Low at investinglive.com.

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