The services sector in Spain grew at a accelerated pace in the month of December 2024, its fastest increase since April 2023. In this sense, the growth was due to a strong increase in orders and recovery tasks after the floods caused by Dana that devastated the country from the end of October to mid-November.
Despite the bad situation that some towns in the Valencian Community, Castilla-La Mancha, Murcia and Andalusia experienced, confidence in the prospects remained high and companies continued to hire additional workers, although capacity remained under pressure and unfilled orders increased again.
Thus, the S&P Global PMI index, which takes into account the commercial activities of the Services Sector in Spain, was above the level of no change of 50.0 points in December for the sixteenth consecutive month. In fact, at rise 4.2 points, From 53.1 to 57.3, the PMI marked the largest monthly increase in business activity since it was published in April 2023, when it rose from 56.7 points in February to 59.4 in March, an increase of 2.7 points.
The increase in new orders was seen supported by increased demand from foreign customers in December, which is supported by the increase in recorded tourism from nearby European countries.
Hiring
The companies surveyed to prepare the PMI index they hired additional staff to help cope with increased activity and increased new orders received. Consequently, employment increased, and it has done so for 27 consecutive months. Growth was marked, although it slowed to its lowest level since last July.
Despite the increase in workerspending orders continued to increaseand the accumulation accelerated to its highest level since May 2022. In this way, companies reported that salaries increased in December, being one of the key factors responsible for the new rebound in operating expenses in general.
Since supplier rates and fuel prices also increased, purchase price inflation accelerated in December until reaching its highest rate in five months. Consequently, service companies chose to raise prices to offset rising costs. Sales price inflation was also the steepest recorded by the survey in six months.
Looking to the future, Confidence strengthened in December. The degree of optimism was the highest since May 2024. Thus, service companies are hopeful of a more stable macroeconomic climate, characterized by greater sales demand.
The private sector grows
In December, private sector growth in Spain grew to reach its highest level since March 2023. This was indicated by the PMI Total Activity Index for Spain, which registered 56.8 points, compared to the 53.2 registered in November. The acceleration in growth was driven by the sharpest increase in service sector activity in twenty months, although there was also a faster increase in manufacturing production later in 2024.
The volumes of new orders received also increased at a rapid pace in December, encouraging a new round of employment growth, also in the private sector. The latest data showed that Hiring levels increased at similarly strong rates across the private sectoralthough the growth was insufficient to prevent a new increase in backlogs, which registered the strongest increase since October 2021. Finally, the study data indicated simultaneous and accelerated increases in both purchase prices and sales in December, which reached their five- and six-month highs respectively.
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