Spain's manufacturing growth slows in September, PMI shows

Spain's manufacturing sector expanded at its slowest pace in three months in September, with weaker gains in output and new orders and a decline in export demand, S&P Global reported on Wednesday.

The HCOB Spain Manufacturing Purchasing Managers' Index (PMI) fell to 51.5 in September from 54.3 in August but held above the 50.0 mark that separates growth from contraction for the fifth consecutive month.

The slowdown in growth was attributed to weaker domestic demand and a decline in new export orders, which fell for the first time in three months. Political uncertainty in key markets and tariffs were cited as factors affecting export sales.

Employment in the sector fell for the first time in seven months, as firms chose not to replace leavers amid an uncertain outlook. The decline in staffing levels was the steepest recorded in over a year.

Inflationary pressures were modest, with input prices rising for the third consecutive month, driven by higher costs for metals and foodstuff. However, competitive pressures led to a fractional decline in output prices for the first time in three months.

"Spain's manufacturing sector is facing a temporary setback," said Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank. "Although the sector's growth momentum decelerated, the broader upward trend seems to remain intact."

Despite the slowdown, manufacturers remain optimistic about future production, although confidence has softened from August's six-month high.

The country's central bank two weeks ago said it expects economic growth to have slowed in the third quarter to a still solid 0.6%-0.7% from 0.8% in the previous quarter. The Spanish economy is set to outperform its peers in the euro area for the second consecutive year in 2025 thanks to a tourism boom and a resilient manufacturing sector as well as strong domestic consumption.