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.