Red Sea Tensions Flagged In Manufacturing PMI

The Spanish January manufacturing PMI was stronger-than-consensus at 49.2 (vs 48.0 cons, 46.2 prior). The headline move is consistent with the January EC survey released earlier this week, which also rose to -5.2 from -6.5. While the manufacturing climate appears to show signs of bottoming out, it remains in contractionary territory and the ongoing Red Sea tensions have added an additional risk to the outlook.

Key notes from the release:

• While the rate of decline in output and new orders slowed significantly, the survey noted "market conditions and demand were reported by panellists to have remained subdued in January, with client purchasing power noted to be weak".
• "Against the backdrop of a subdued business climate, manufacturers understandably remained circumspect when it came to purchasing and employment decisions".
• "Further declines in both input costs and output charges were recorded during January. Panellists reported that soft demand in global markets continued to weigh on both prices paid for inputs and the pricing power of manufacturers themselves".
• "There were numerous reports that conflict and crisis in the Red Sea, and the associated delays caused in global shipping, were the primary factors behind the deterioration in vendor performance".