Spain August services PMI 49.3 vs 51.5 expected

<ul><li>Prior 52.8</li></ul><p>That's a miss and it is the first time since last October that Spain's services sector enters contraction territory. There were fresh falls in new business and overall activity while employment growth was the softest since January. HCOB notes that:</p><p>“Summer is ending and so is the good mood among Spanish service providers, including the tourism sector. Activity in this
sector shrank for the first time this year and the same is true for the general service sector and new and outstanding
business. Thus, it's likely that things will keep slowing down over the next few months.
</p><p>“Our GDP Nowcast, which considers the PMI-Indicators, now points to a GDP shrinking by 0.1% in the third quarter. This
might throw some doubt on the recently boosted GDP prediction of 2.3% of the Bank of Spain, especially if we saw a further
slump in economic activity in the next quarter, too.
</p><p>“The environment during August has been a mixed bag for Spain. In many regions, people were suffering under the heat
wave, political uncertainty was a burden for many businesses amid the recent general elections, while winning the women’s
world championship had certainly lifted people’s spirits. With all of this going on, companies were less keen to ramp up their
staff but are looking somewhat more optimistic into the future than before as they expect activity to increase in 12 months
from now.
</p><p>“Spanish service firm’s pricing power has continued to suffer somewhat as the rate of price jumps is cooling off, even though
input prices have increased at a higher rate. As a result, profit margins are likely taking a hit.”</p>

This article was written by Justin Low at www.forexlive.com.