Once again, Spain remains the bright spot in the Eurozone. This represents the largest increase in activity in more than a year. HCOB notes that:
“In May, Spain's services sector continued to expand. Both activity and new business saw significant growth, with the Services PMI business activity index rising to 56.9. This growth was driven by the strong increase in new business, which has now been rising for six months As we also saw in the manufacturing sector, participants reported higher overall demand and greater success in acquiring new customers. Particularly encouraging was the significant rise in export business, especially in key markets such as France and Germany.
“Spanish service providers are urgently looking for workers. Providers have continued to expand their workforce to manage growth, although the hiring increase was the smallest since February. Despite the expansion of the workforce, staff numbers were often understaffed, leading to more From the rise in pending works – the steepest since April 2023.
“The service sector continues to face the problem of rising prices. The main reason is rising wages, which constitute a significant amount of expenses in the labour-intensive service sector. Consequently, service providers pass these costs on to consumers. Cost pressures and PMIs are also reflected in consumer price developments “If the ECB is about to cut interest rates at its June meeting, as we expect, there is additional concern about price developments in the coming months.”