Spain Manufacturing Sector Contracts in August

2026-09-01 07:26 By Agna Gabriel 1 min. read

The S&P Global Manufacturing PMI fell to 49.5 in August 2026 from 50.2 in July, the lowest since March and missing expectations of 50.1.

Both production and new orders declined, reflecting subdued domestic demand and weaker international sales, with tariffs also weighing on exports.

Firms responded by drawing down finished-goods and input inventories, while purchasing activity contracted for a ninth month.

Employment also fell for the twelfth month in a row, although the decline in outstanding work was partly supported by lower capacity utilisation.

Supply conditions remained challenging, as disruptions linked to the Middle East conflict affected shipping routes and the availability of materials.

Higher energy and transportation costs pushed input-price inflation significantly higher, prompting firms to raise selling prices as well.

Looking ahead, business confidence weakened further, with concerns over elevated energy costs and fragile demand clouding the outlook for production.



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Spain Manufacturing Sector Contracts in August
The S&P Global Manufacturing PMI fell to 49.5 in August 2026 from 50.2 in July, the lowest since March and missing expectations of 50.1. Both production and new orders declined, reflecting subdued domestic demand and weaker international sales, with tariffs also weighing on exports. Firms responded by drawing down finished-goods and input inventories, while purchasing activity contracted for a ninth month. Employment also fell for the twelfth month in a row, although the decline in outstanding work was partly supported by lower capacity utilisation. Supply conditions remained challenging, as disruptions linked to the Middle East conflict affected shipping routes and the availability of materials. Higher energy and transportation costs pushed input-price inflation significantly higher, prompting firms to raise selling prices as well. Looking ahead, business confidence weakened further, with concerns over elevated energy costs and fragile demand clouding the outlook for production.
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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.
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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.
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