Spain's Service Sector Expansion in October

MADRID (Reuters) – Spain's service sector continued its robust expansion in October, driven by strong sales and demand, according to the HCOB Spain Services PMI survey compiled by S&P Global.

The PMI index for the services sector stood at 54.9 in October, down from 57.0 in September but still comfortably above the 50.0 threshold indicating growth. It marked the 14th consecutive month of expansion.

Activity in the sector was bolstered by marketing efforts, increased employment, and a rise in new business, which grew for the 11th month in a row. New export orders also rose solidly, extending the growth period to eight months.

"Spain's economy continues on its positive trajectory… The Spanish service sector remains a significant growth driver… The Employment Index reached its highest level in 18 months, underscoring confidence and momentum in services," said Hamburg Commercial Bank economist Jonas Feldhusen.

Employment in the sector grew rapidly as firms expanded their workforce to meet demand and replace leavers. Despite this, capacity pressures persisted, with backlogs of work increasing for the 10th consecutive month.

Input price inflation accelerated, driven by higher salary costs, leading firms to raise their selling prices. This trend is contributing to higher core inflation, which remains above the headline rate.

Looking ahead, businesses remain optimistic, expecting positive market conditions and planning further commercial actions to drive growth over the next year.

Earlier this week, a sister survey showed Spanish manufacturing expanded in October at its fastest pace in over two years.

Spain's statistics department last week reported that the economy expanded at a 0.8% pace in the third quarter, faster than economists had expected, compared to 0.4% in the eurozone as a whole.