Spain Services PMI Below 50 Again, But Contraction Moderates

The Spanish services sector contracted for the 8th consecutive month in March, but it was the smallest contraction in that sequence and beat expectations, coming in at 48.1 (vs 43.1 in Feb and the 45.8 BBG Survey).

• IHS Markit's report notes that "activity continued to be negatively impacted by COVID-19 restrictions during March, albeit perhaps not to the same degree as recent months with some firms reporting an improvement in underlying demand". That said, an overall decline in services sales was led by a drop in foreign orders, especially in tourism/hospitality.
• Services firms are being pressured on prices at both ends: "Margins also remained under pressure, with firms reporting another noticeable increase in operating expenses, but a slight drop in output charges."
• Jobs growth was negative, "extending the current period of job shedding to over a year – although the pace of contraction was comfortably the weakest in the current sequence. Job losses were again linked by firms to a reduction in new work, plus continued efforts to keep on top of operating expenses."
• As with services sectors elsewhere in Europe, Spanish firms reported strong confidence in the outlook on the back of the COVID vaccine rollout (though sentiment was little changed from Feb).

IHS Markit, MNI