Spain’s Service Sector Activity Surges in September

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

The HCOB Spain Services Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 57 in September from 54.6 the previous month. This index remains above the 50 mark, which separates growth from contraction, for the 13th consecutive month and has not been this high since April 2023, when it reached 57.9.

The growth is primarily driven by domestic demand, as indicated by the survey.

“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 quoted by S&P Global in its monthly report.

The survey also revealed that business confidence in the country’s outlook has strengthened, leading firms to hire additional staff. However, rising wages have increased costs, causing companies to raise their prices, although this occurred at a slower rate than at the beginning of the year.

This robust services growth follows a reported acceleration in manufacturing activity last month, highlighted in a sister survey released earlier this week.

The service sector, notably driven by tourism, accounts for more than half of Spain’s gross domestic product (GDP).

Last month, the government revised its economic growth forecast for the year to 2.7% after unexpectedly strong growth of 0.8% in the second quarter compared to the previous three months, with Spain showing better performance than its eurozone peers.