Spain Services PMI May 2008

Spain's services sector shrank for the fifth month running in May, although the pace of contraction was slightly less than in April according to the May NTC Purchasing Managers Index. Staffing levels in the sector contracted at sharpest pace of the 9 year survey record and companies were pessimistic on the outlook for one-year ahead. The PMI for the Spanish service sector stood at 43.3 in May, compared with 42.5 in April and 56.2 in May 2007.





Any figure below 50.0 shows contraction while figures over 50.0 show growth.

For the first time in the near 9-year survey history, companies in the Spanish services sector were pessimistic overall regarding the outlook for activity in a year's time. The Business Expectations Index registered 49.3 from 54.7 last month.

"Cost pressures and faltering demand led many firms to believe that conditions could worsen in the year ahead," said Nathan Carroll, economist at NTC Economics.

Prices charged by the Spanish service providers fell in May, in a positive sign for Spanish inflation - the highest in the euro-zone - as companies slashed margins in an attempt to re-ignite demand. But this squeezed profit margins further for companies already crushed by higher input prices led by soaring energy costs.