Manufacturing sector contracts further in August

It was the fourth month in a row the index has stayed below the 50 mark that separates growth from contraction, although it was slightly higher than the 45.1 expected by economists.

Spain's economy has struggled to gain any serious momentum in its recovery, but it has at least been helped by growth in exports.
However, the PMI showed the new export orders index slipped to 48.2 in August from 49.5 in July, suggesting support from exports would wane in the third quarter. “August PMI data paint a concerning picture of conditions in the Spanish manufacturing sector, with output, exports and employment all declining at sharper rates than in July,” said Andrew Harker, economist at data provider Markit.

Spain's economy expanded by 0.2 percent in the second quarter from the first, and that weak rate is expected to cool further though the country may escape slipping back into recession.

The data also showed an easing in output and new orders over the past month, with the latter's subindex falling to its lowest level since May 2009.
The outlook for the sector also looked poor.
Finished goods inventories rose for the first time in nearly three years, indicating production will likely be scaled back further in coming months as stocks will be used to meet orders, Harker said.

Employment prospects also look grim for the manufacturing sector.
The employment index sank further into contraction in August, where it has been for four years, bar one month's exception.
The data also showed output prices contracted for the first time since October, while input prices continued to rise, albeit at a more moderate pace than last month on the back of falling energy prices.