Spain August manufacturing PMI 46.5 vs 48.8 expected

<ul><li>Prior 47.8</li></ul><p>That's a sharp drop in Spain's manufacturing activity with the headline reading being the lowest so far this year. Of note, new orders are showing their quickest pace of declines since November last year as subdued demand conditions are weighing further on Europe's manufacturing sector. HCOB notes that:</p><p>“Manufacturing output took another hit in August, shrinking for the fourth straight month and a bit faster than last month. We
are pretty sure, that Spain’s manufacturing sector has entered recession, starting in the second quarter. Our expectation is
that the industry's slide has gotten worse, reaching about -1% this quarter. This is the result of our GDP nowcast which takes
among other things the PMI figures into consideration.
</p><p>“Weakness stems above all from domestic demand. While new export orders took a dive at about the same pace as in July,
the downturn in total new orders picked up notably. In a similar way, companies quickened the pace of trimming down
material purchases. Thus, in the short term it will get worse before it gets better.
</p><p>“While the big picture isn't all that positive, manufacturers are keeping their spirits up in a way. An increased share of
respondents were confident about an increase in output in 12 months from now. This fits into the observation that employers
ceased to cut staff, after two months of modest reductions.
</p><p>“Deflationary pressures eased somewhat. Input prices are still declining, but not dropping as much as they did in July.
Correspondingly, the pressure to cut output prices softened too.”</p>

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