December 4, 2019 / 8:34 AM / 2 months ago

Spanish services activity speeds up in November on domestic demand: PMI

FILE PHOTO: The landmark Metropolis building at the start of the Gran Via is seen in Madrid, Spain, June 19, 2018. REUTERS/Paul Hanna

MADRID (Reuters) - Spain’s services sector grew faster in November as domestic demand picked up, a survey showed, with confidence about the future at a four-month high despite political uncertainty following an inconclusive national election

The headline Business Activity index in Wednesday’s Markit Purchasing Managers’ survey (PMI) rose to 53.2 from October’s 52.7. The index has held above the 50 line separating growth from contraction for just over six years.

Firms in the services sector, which accounts for around half Spain’s economic output, reported a broad pick-up in demand, with an increase in new business volumes focused on domestic markets.

Some firms reported concerns linked to the formation of a new government and its as yet unknown impact on economic activity, notably wages and regulatory frameworks.

The Socialist Party won last month’s snap election while failing to secure a majority. It reached a coalition agreement with left-wing Unidas Podemos but needs additional support from smaller parties, including Catalan separatists, to form a government in a very fragmented parliament.

“Against an uncertain political backdrop, the modest improvement in growth during November was a welcome development following October’s weakest effort for around six years,” Paul Smith, Economics Director at IHS Markit, said in a statement.

According to a sister survey released on Monday, Spain’s manufacturing sector contracted for a sixth month in November as weak overseas demand and domestic political uncertainty weighed, though there were rebounds in all segments.

Reporting by Emma Pinedo; editing by John Stonestreet

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