Spanish Service Sector Growth Surges in September

MADRID (Reuters) – Spanish service sector activity accelerated again in September, registering its fastest growth in over a year, according to a business survey released on Thursday.

The HCOB Spain Services Purchasing Managers' Index, compiled by S&P Global, increased to 57 in September from 54.6 in August. This reading remains above 50, indicating growth for the 13th consecutive month, reaching this level for the first time since April 2023 where it peaked at 57.9.

The growth was primarily fueled by domestic demand, the survey revealed.

> "The summer is coming to an end and Spain is coming up with a little surprise, as the latest PMI data shows signs of accelerated growth in September, although we anticipated growth to cool down somewhat in the second half of the year," said Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, as reported by S&P Global in its monthly report.

The survey indicated that business leaders exhibited stronger confidence in the country's economic outlook and increased hiring, although rising wages raised operational costs, leading firms to lift their prices, albeit at a slower pace than in early 2023.

Following a reported acceleration in manufacturing activity last month, this strong services growth underscores the importance of the service sector, particularly tourism, which constitutes more than half of Spain's gross domestic product.

Additionally, the government recently updated its economic growth forecast for the year to 2.7%, following an unexpectedly brisk 0.8% growth in the second quarter compared to the previous three months, placing Spain ahead of its euro zone peers.