MADRID, Nov 2 (Reuters) – Factory activity in Spain fell sharply in October, in its fourth straight month of decline amid high inflation, with output and new orders falling at the fastest pace since the peak of COVID-19 lockdowns in 2020.
S&P Global’s Purchasing Managers’ Index (PMI) for the manufacturing sector fell to 44.7 last month – its lowest level since May 2020 – from 49.0 in September. The 50.0 mark separates growth from contraction.
S&P Global economist Paul Smith said “the twin slumps in production and new orders in October…should highlight the severity of the challenges engulfing the sector, as widespread economic uncertainty and the impacts of ‘high inflation weighs heavily on demand and industry performance’.
Even as the pace of price increases slowed, inflation continued to negatively impact market demand, while many companies also opted to cut jobs, the combination of excess capacity and growing pessimism about the future weighing on employment.
This could be bad news for the government, which hopes that Spain can avoid the recession that threatens many European countries thanks to the resilience of its labor market.
Spanish consumer prices in the year to October rose 7.3% – the slowest pace since January. Economic growth slowed sharply to 0.2% in the third quarter from the previous three-month period, when gross domestic product grew by 1.5%.
Reporting by Andrei Khalip; Editing by Hugh Lawson
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