MADRID, March 4 (Reuters) - Spain's service sector continued to grow in February, albeit at a slower pace, as demand softened and cost pressures intensified, an S&P Global survey showed on Wednesday.
Spain's Service Sector Expansion Slows in February Amid Cost Pressures
Analysis of Spain's Service Sector Performance in February
Growth Trends and PMI Data
MADRID, March 4 (Reuters) - Spain's service sector continued to grow in February, albeit at a slower pace, as demand softened and cost pressures intensified, an S&P Global survey showed on Wednesday.
The HCOB Spain Services PMI fell to 51.9 last month from 53.5 in January, marking its lowest level since June. PMI readings above 50 indicate expansion, while those below point to contraction.
Factors Contributing to the Slowdown
The slowdown in growth was attributed to a cooling in market conditions, with new business volumes rising at their weakest rate since mid-2025.
New export business declined for the second consecutive month, reflecting cautious spending by foreign clients amid macroeconomic uncertainties.
Employment and Cost Pressures
Employment in the service sector increased, extending a nearly 3-1/2-year growth period. However, the rise was the softest since last September, as some firms opted not to replace departing staff due to slower demand growth.
Inflation and Output Charges
Cost inflation surged to its highest in a year, driven by increased vendor prices and higher salaries. In response, service providers raised their output charges at the fastest rate since last October.
Outlook and Sector Sentiment
Looking ahead, firms remain cautiously optimistic, expecting growth from new projects and marketing efforts. However, overall confidence fell to its lowest since last August, with concerns about a broader economic slowdown impacting expectations.
Expert Commentary
"The Spanish private sector economy is continuing to lose growth momentum," said Hamburg Commercial Bank economist Jonas Feldhusen.
Market Demand and Price Dynamics
"The service sector is losing steam, with market demand cooling since the beginning of the year, especially in foreign new business," Feldhusen said.
He added that price dynamics remained a concern, with input price inflation accelerating to its fastest pace in a year.
(Reporting by David Latona; Editing by Hugh Lawson)
