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Tentative Signs of Softer Services Inflation in May PMI

MNI (London)


  • Despite cooling by 1.2 points to 56.7, the Spanish services PMI remained firmly expansive for a seventh consecutive month in May.
  • New orders and total business activity again saw a strong month, albeit slightly softer than in April. Tourism demand is adding to the boost ahead of the summer holiday season.
  • Inflationary pressures remained acute, with wage pressures cited as the key upwards contributor. Yet May saw tentative signs of cooling input and output inflation rates, with input cost inflation slowing to the softest pace in 20 months.
  • Spanish May inflation eased by 0.9pp to +2.9% y/y and surprising 0.4pp to the downside in last week's flash report. Despite the brief report only highlighting declines in non-core goods, Spanish core inflation (non-harmonised) also surprised to the downside at +6.1% y/y (down 0.5pp).
  • Spanish services CPI has recently shown tentative signs of slowing, edging down 0.1pp to +4.3% y/y in April. Barring a substantial tourism-driven boost to services prices, today's PMI report adds to evidence that sticky services CPI may be beyond peak.

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