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Spanish factory activity speeds up in October -PMI

MADRID, Nov 2 (Reuters) - Spanish factory activity expanded in October at the fastest pace in three months, a survey showed on Monday, in response to new orders even though restrictions related to coronavirus still limit demand.

IHS Markit’s Purchasing Managers’ Index (PMI) of manufacturing companies rose to 52.5 in October from 50.8 in September. A reading above 50 denotes growth. The figure is the highest since the indicator reached 53.5 in July, the month following the lifting of coronavirus lockdown measures in Spain.

The index had dived to 30.8 in April, when all non-essential economic activity was halted.

“A welcome acceleration in manufacturing production growth was recorded during October, although with the gain in new orders lagging behind output, manufacturers built up inventory,” said Paul Smith, Economist at IHS Markit.

Expectations of output over the coming 12 months strengthened in October as business owners now have positive expectations that the COVID-19 pandemic will be fully under control by this time next year.

The Spanish economy expanded a record 16.7% in the third quarter from the previous quarter, official data showed, as the economy partly recovered from its worst ever recession with a 5.2% quarterly contraction in the first quarter and a 17.8% contraction in the second quarter.

The Spanish government expects the gross domestic product to contract 11.2% this year. (Reporting by Inti Landauro; Editing by Toby Chopra)