Spain service sector growth accelerates in September

Investing.com -- Spain’s service sector expanded at a faster pace in September, supported by the strongest rise in new business since January, according to the latest HCOB Spain Services PMI data.

The headline HCOB Spain Services PMI Business Activity Index rose to 54.3 in September from 53.2 in August, indicating accelerated growth that has now continued for over two years.

New business growth was steep, reaching its highest level since the start of 2025, with service providers reporting positive demand conditions and success in securing new customers. However, new export business increased only marginally amid reports of soft tourism demand.

Business confidence improved to a six-month high as companies expressed optimism about future demand. Many firms indicated plans to expand both service ranges and commercial activities in the coming year.

Employment growth continued for the 36th consecutive month, though September’s increase was the softest since November 2023. Despite this slower hiring pace, capacity constraints persisted, with backlogs of work rising for the third month in a row.

On the cost side, higher salary expenses drove a sharp rise in operating costs. Although slightly softer than August’s six-month high, input cost inflation remained historically elevated. In response, service providers increased their selling prices, extending the streak of price hikes to four-and-a-half years, though the rate of increase was the weakest in four months.

The broader HCOB Spain Composite PMI Output Index, which includes manufacturing, registered 53.8 in September, virtually unchanged from 53.7 in August, indicating continued solid growth in the private sector economy.

Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, noted that "The Spanish economy is skilfully navigating global challenges, staying on a growth trajectory," with the service sector gaining momentum while manufacturing growth softened.

Feldhusen highlighted that the only concern was softer foreign export business, particularly in tourism, which may be linked to political uncertainty in France affecting consumer sentiment.

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