Spain CRISIS: Manufacturing plummets to negative territory as Brexit devastates Europe

Sunday, March 3, 2019
By Paul Martin

SPAIN’S manufacturing activity plummeted into negative territory for the first time in more than five years, sparking fears the economy could soon slip into recession.

Sun, Mar 3, 2019

Purchasing Managers’ Index (PMI) figures, which indicate of economic health for manufacturing and service sectors, show Spain’s production fell from a positive 52.4 in January to 49.9 in February. Readings above 50 indicates an economic expansion, while a reading below 50 indicates a reduction. A higher than expected reading should be considered positive/bullish for the eurozone, while a lower than expected reading is considered negative/bearish for Europe.

The report read: “The PMI index decreased in Spain from 52.4 registered in January and was below the level of absence of changes of 50.0 for the first time since November 2013, putting an end to more than five years of continuous growth of the sector.

“Even exports do not support the order book.

“The deterioration of new orders received from foreign customers was the first in almost six years and reflected a weakening of demand in neighbouring European countries and the fall in sales to China.”

Spain’s performance adds to Europe’s economic woes as the PMI confirmed powerhouses France and Germany also suffered while figures for the entire continent were also dire.

Germany’s PMI score fell to 47.6 points last month from 49.7 in January – the worst barometer value in more than six years while Italy, which tumbled into recession at the start of this year, saw its reading edge down marginally to 47.7 points from 47.8.

Growth in France barely managed to gather any pace at all, rising from 51.2 in January to 51.5 last month.

For the entire continent, eurozone manufacturing index slumped to 49.3 from 50.5.

Commenting on Spain’s PMI data, Paul Smith, economic director of IHS Markit, said: “Given that it is unlikely that the mentioned challenges will be resolved in the short term, it seems that growth inevitably will be limited in the coming months.

“February proved to be a challenging month for Spain’s manufacturers.

“Undermined by a first deterioration in order books for over two-and-a-half years, latest data showed that a run of continuous growth that stretched to over five years finally came to an end.

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