Spain Services Sector Stabilises in May

The S&P Global Spain Services PMI rose to 50.1 in May 2026 from 47.9 in April, above market expectations of 48 and signalling a stabilization in activity after the previous month’s contraction. The slight improvement was supported by a return to growth in new business, driven by stronger demand. However, growth remained modest as uncertainty linked to the Middle East conflict continued to weigh on market conditions and export orders declined for a fifth consecutive month. Input costs increased sharply, largely due to higher energy and fuel expenses, alongside rising supplier and labour costs. In response, service providers raised their selling prices, although output price inflation eased to a three-month low. Business confidence improved slightly but remained below historical norms due to ongoing geopolitical uncertainty. Despite this, firms expanded hiring, with employment growth strengthening through a mix of temporary and permanent recruitment.

The S&P Global Spain Services PMI fell to 47.9 in April from 53.3 in March, dropping below the 50 mark for the first time since August 2023 and reaching its lowest level since early 2022, missing market expectations of 52. The decline was driven by a similar fall in new orders, as firms cited weak demand and heightened uncertainty linked to the Middle East conflict. Clients showed reluctance to commit to new spending, with both domestic and export demand weakening, the latter seeing its sharpest drop since July 2022. Business confidence also deteriorated to its lowest since December 2022. Rising energy, fuel and wage costs continued to push operating expenses higher, prompting firms to raise prices. Employment still increased, though at a slower pace, while backlogs edged up slightly amid capacity pressures and supply constraints.

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.