Spain Manufacturing Sector Unexpectedly Contracts

The S&P Spain Manufacturing PMI fell to 49.7 in June 2026 from 51.2 in May, missing market expectations of 51 and signaling a minor contraction. This slowdown was heavily driven by a pronounced drop in new orders and export demand, as geopolitical uncertainty regarding the Middle East conflict prompted businesses to halt activity and delay key decisions. Consequently, manufacturers scaled back production for the first time in three months, though a minor buildup in warehouse inventories occurred for the first time in 19 months. In response to sluggish sales, companies modestly cut staffing levels and reduced purchasing activity. Meanwhile, the Middle East crisis continued to disrupt supply chains, causing significant shipping delays and component shortages. These disruptions pushed up supplier costs for fuel and raw materials, forcing manufacturers to implement their steepest output price hikes since October 2022 to preserve margins.

The S&P Global Spain Manufacturing PMI eased to 51.2 in May 2026 from 51.7 in April, below forecasts of 52, signaling a modest but slowing expansion. The ongoing Middle East conflict intensified supply chain disruptions, driving shortages and higher input costs, while uncertainty weighed on activity. New orders fell for the fifth time in six months amid weak domestic and external demand, with exports declining for a ninth straight month. As a result, output rose only marginally for a second month, and firms reduced both employment and purchasing activity. On the price front, input costs rose at the fastest pace in four years and among the strongest in the survey’s history, with the recent acceleration seen in the past three months the most pronounced since 1998. Higher input prices fed through to output charges as firms sought to protect margins. Lastly, confidence in the outlook remained historically subdued despite improving further from March’s recent low.

The S&P Global Spain Manufacturing PMI rose to 51.7 in April 2026 from 48.7 in March, surpassing market forecasts of 49.5. The latest data signals a return to growth in manufacturing activity for the first time since last November, driven by a solid rise in production, which increased at its fastest pace in five months. This was supported by a slight rebound in new orders following March’s sharp contraction, partly reflecting inventory accumulation as clients sought to secure goods amid product shortages and supply disruptions linked to the Middle East war. Export orders continued to decline for the eighth consecutive month, though at a slower pace, highlighting underlying demand fragility. Purchasing activity and employment decreased again. Price pressures intensified, with input costs rising at the fastest rate since June 2022 and selling prices increasing at their steepest since November 2022. Sentiment remained historically weak, with firms highly uncertain about the outlook.