Competition Limits Inflationary Pressures In Spain Manufacturing PMI

The Spanish April manufacturing PMI exceeded expectations at 52.2 (vs 51.4 cons, 51.4 prior). Last weeek's flash Eurozone PMI suggested that manufacutring output ex-France and Germany was expected to be broadly stable, suggesting Spain's print is a surprise to the upside.

The details of the PMI suggest an improvement in production and employment, while price pressures were limited by increased competition amongst firms.

Key notes from the release:

• “Supporting the PMI were accelerated increases in both production and new orders during April. Growth rates were also the best seen in over two years”.
• “There were reports that market demand had improved, bolstering sales from both domestic and international clients.”
• “In several cases, firms noted that production growth had outstripped that of new work”.
• “Despite positive trends in buying activity and production, capacity pressures were nonetheless evident in the latest survey period”...” Panellists responded by bolstering staffing numbers”.
• “Additional staff were also hired with one eye on the future as firms signalled positive expectations for output in the year ahead”.
• “There were some reports that stock shortages and logistic challenges had led to a marginal lengthening of delivery times in April”
• ”Firms also reported that inflationary pressures had persisted, with a broad-based rise in raw material prices said to have driven up cost bases”.
• “Firms’ own pricing power was restricted by competitive pressures and a desire to stimulate sales. Subsequently, output charges fell again in April”,