Spain Manufacturing Activity Remains Subdued

The S&P Spain Manufacturing PMI rose to 50.2 in July 2026 from 49.7 in June, hovering just above the expansion threshold. Despite the slight uptick, underlying performance remained weak, as both output and new orders continued to decline. Ongoing Middle East conflict disruptions caused persistent shipping delays, supply chain bottlenecks, and elevated energy and transport costs. However, overall input and output price inflation cooled to a five-month low. In response to sluggish market demand, manufacturers aggressively drew down existing input and finished goods inventories while cutting purchasing activity at the sharpest rate in over a year. Employment contracted marginally for the eleventh consecutive month due to unreplaced staff departures and hiring hesitations. Nevertheless, broader business sentiment rebounded to its highest level since February, driven by long-term growth plans and expectations of an eventual market recovery.

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.