Spain: Strong divergence of PMI readings in June – ING

Steven Trypsteen, economist at ING, notes that the Spanish PMI for the service sector increased to 53.6 in June from 52.8 in May.

Key Quotes

“Higher levels of new orders supported the increased activity. These higher levels were predominately driven by domestic demand as new export orders declined quite sharply.”

“The situation in the manufacturing sector is quite the opposite. The PMI for the manufacturing sector entered contractionary territory in June, falling to 47.9 from the already low level of 50.1 in May. Lower volumes of new orders, both at home and abroad, lead to a drop in output.”

“If the weakness in the manufacturing sector continues for much longer and results in further job cuts, this could impact the services industry.”

“We think that overall growth will be weaker in the second half of the year compared to the first half. For 2019 as a whole we think growth will still be decent. We forecast 2.2% growth in 2019 and 1.5% for 2020.”