Spain January manufacturing PMI 49.2 vs 48.0 expected

<ul><li>Prior 46.2</li></ul><p>The downturn in Spain's manufacturing sector eases in January with the reading being a 10-month high. Demand conditions remain subdued but at least the fall in new orders and output were not as severe. Of note, the rate of decline in both categories were the softest since June last year. HCOB notes that:</p><p>“As the new year kicks off, Spain’s manufacturing sector is receiving a breath of fresh air. The PMI index takes a significant
leap from 46.2 to 49.2 in January, indicating only a slight contraction. Although the downturn persists, its intensity has
notably diminished. Other crucial indicators, such as new orders and quantity of purchases, are experiencing a slower
decline compared to December.
</p><p>“Business expectations have seen a remarkable boost at the year's outset, reaching a near two-year peak. Companies
surveyed are embracing an optimistic outlook, projecting increased demand for 2024. This optimism may stem from the
waning inflation dynamics, leading to enhanced purchasing power for households and increased speculation among
businesses regarding future interest rate cuts. According to our HCOB forecast, we anticipate two interest rate cuts this year,
set to commence in June. Corresponding to the heightened business expectations, declines in both domestic and foreign
new orders has significantly eased.
</p><p>“January witnessed tangible delays in lead times for inputs, primarily attributed to the crisis in the Red Sea. However, input
prices have not seen an increase, maintaining a downward trend. The missing impact of higher transport costs for container
shipments on prices can be attributed to transport costs constituting less than 2% of the overall expenses for these
transported goods.
</p><p>“Within the manufacturing landscape, consumer goods continue to act as a stabilizing force, with new orders and production
showing sustained growth. While indices for capital goods and intermediate goods remain in the contraction zone, the
declines in output and new orders have perceptibly decelerated, fostering cautious optimism in these sectors.”</p>

This article was written by Justin Low at

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