Spain Services Growth Unexpectedly Accelerates

The S&P Global Spain Services PMI rose to 53.3 in March 2026 from 51.9 in February, defying expectations of a slowdown to 50.8. Business activity grew solidly, supported by rising new orders, though growth slowed to a nine-month low amid uncertainty tied to the Middle East conflict. Foreign demand remained weak, with export sales falling at the fastest pace since January 2024. Employment continued to rise, extending the current hiring streak to three-and-a-half years, while firms also expanded capacity, with backlogs of work increasing slightly for the first time in four months. Meanwhile, input costs surged at the fastest rate in nearly three years, driven by higher energy, fuel, and wage expenses. In response, companies raised output charges at the quickest pace since August 2025. Despite ongoing growth, business confidence fell to its lowest level since September 2023, as firms expressed concerns over inflation and its potential impact on future demand.

The HCOB Spain Services PMI fell to 51.9 in February 2026 from 53.5 in the previous month, the lowest since June and well below expectations of 52.8. New business growth eased, with foreign demand declining for the third time in four months, leaving expansion largely driven by domestic clients. Employment continued to rise, extending the current hiring streak to nearly 3-1/2-years, but job creation was the weakest since September. Some firms chose not to replace departing staff as expectations softened to a 6-month low. Capacity pressures remained limited, with backlogs falling slightly for a third consecutive month. Meanwhile, input prices rose at the fastest rate in a year, reflecting higher supplier charges and wage increases. In response, firms lifted output prices at the sharpest pace since October, marking three straight months of accelerating inflation. Despite expectations of improved activity over the coming year, overall confidence slipped to its lowest level since August.

The HCOB Spain Services PMI fell to 53.5 in January 2026 from December’s 12-month high of 57.1, well below market expectations of 56.6. The latest reading signaled the weakest pace of expansion in services activity since August, though growth remained solid overall. New business growth also eased to its slowest since June, while export sales declined for a second time in three months, with firms pointing to weaker demand from key European markets. Employment growth remained strongly positive and picked up from December, reaching its highest level since last March. On the price front, input cost inflation stayed elevated, with companies citing higher costs for computer hardware and components as well as rising labor expenses, while selling prices increased at the fastest pace in three months. Finally, business sentiment improved slightly, climbing to a ten-month high.