Services PMI: Spain Misses, Italy Beats

Sept Services PMI comes out for Spain at 42.4 (vs 46.4 exp., 47.7 prior) and Italy at 48.8 (vs 46.6 exp., 47.1 prior), a miss and a beat vs expectations, respectively - though both below the 50.0 expansion waterline. Some highlights from the IHS Markit reports:

• SPAIN: The biggest challenge for Spanish service sector businesses was "a lack of incoming new work amid reports of an intensification of the COVID-19 crisis", with new business falling for the 3rd straight month and the fastest since May. Demand was reported to be falling across the board, incl export orders (for 17th straight month).
• Companies reported the biggest decline in staffing levels since June. Input costs rose but firms reported that due to weak demand and competitive pressures, they could not pass on these rising prices to customers. The outlook was mixed: confidence about the futures was at a three-month high, but several firms "signalled considerable uncertainty about the outlook".
• ITALY: For Italy, similar themes, with service sector businesses citing "muted demand conditions" for another sub-50 reading. New business seen falling marginally for the 2nd consecutive month, incl a marked decline in new export orders, and payroll shedding (albeit the slowest in the past 7-months).
• Italian services companies also saw higher cost burdens (4th consecutive month) which they had to absorb, given competitive pressures and weak demand. Like Spain, future activity optimism seen the highest since March 2018, though subdued vs history.