Red Sea Disruption Leads To Rise In Delivery Times

The Spanish February manufacturing PMI was 51.5, above 50 for the first time since March 2023 and the highest reading since June 2022 (vs 49.8 cons, 49.2 prior). However, in contrast to the German and French flash prints, Red Sea disruptions "led to the steepest lengthening of delivery times since September 2022". However, competition amongst manufacturers meant the pass-through into output charges was limited - for now.

A reminder that the EZ flash PMI release already signalled that the region ex-France and Germany saw a stabilisation of manufacturing output in February.

Key notes from the release:

• "Companies reported that sales had risen on the back of improved demand, and the latest figures marked a turnaround from the noticeable contractions seen in recent months"
• "Growth was predominately led by the domestic market: new export orders continued to fall in February albeit at a slower pace".
• "Employment and purchasing activity also increased and marked returns to growth following sustained periods of contraction through much of 2023".
• "Conflict in the Red Sea and associated disruptions to shipping routes through the Suez Canal led to the steepest lengthening of delivery times for just under a year-and-a-half. Several companies suggested that these delays led to higher prices".
• "Competitive pressures and efforts to drum up new business nonetheless meant that output charges declined again in February".