The beginning of summer, the arrival of international tourists and the relaxation of restrictions in the hospitality industry pushed the tertiary sector during the past month to levels never seen in two decades. The PMI index of the consulting firm IHS Markit stood at 62.5 points in June, two above what experts expected and exceeding the 59.4 points in May. “Benefiting from remarkably higher sales, Spanish service companies enjoyed their best overall increase in activity since the beginning of 2000,” Paul Smith, chief economics officer at IHS Markit, explains in a note.
The PMI is a leading indicator of the economy, which is prepared through a survey of the purchasing managers of 350 Spanish service companies: they have to value from 0 to 100 the evolution of their commercial activity with respect to the previous month, in this April case. A figure above 50 indicates an increase in sales and below, a contraction.
The consulting firm assures that the sectors that benefited the most from the improvement in sales were hospitality and transport, two segments linked to tourism. This improvement is explained by the opening of the Spanish borders on June 7 to international tourists and by the good rate of vaccination in Spain, which led to the Spanish hotels exceeding the booking levels of 2019 in the last week of June, before of the pandemic. The biggest monthly drop in the number of unemployed in 25 years has also played a role.
However, the consulting firm points out that this growth in the tourism sector is hampered by the pothole in the United Kingdom, the main issuer of travelers to the peninsula, with a growing incidence of the virus and with restrictions to travel to Spain imposed by both the British Government as for the Spanish. “If these problems can be solved, Spain will be on the way to an even stronger growth profile in the coming months,” adds Smith.
Prices at highs in two decades
The Spanish businesses consulted by IHS Markit added fuel to the intense debate on inflation. During the month of June, utilities raised their average rates charged to the highest level since February 2000. They did so to offset higher costs related to fuel, transportation and utilities, as well as an overall increase of staff-related costs due to labor shortages. This trend was also manifested by the group of companies in the euro area, both in the service and industrial sectors.
The consultancy Oxford Economics warns in a note that this increase in prices in the value chain could lead to higher prices of products for consumers: “The companies surveyed indicated that the increase in costs translates into higher prices for their customers. , which is likely to translate into a rebound in underlying price pressures across the euro area in the coming months. “
The service sector activity index also expanded in June in the rest of the euro zone, reaching 58.3 points, up from 55.2 in May and the highest level since 2007. Spain and Ireland led the way. growth. “This indicates that corporate optimism is spread across the eurozone, confirming that the eurozone economy ended the second quarter on a high note and bodes well for recovery in the second half of 2021,” he explains. in the note Mateusz Urban, Oxford Economics.