Spain manufacturing decline speeds up

Madrid - Spain’s manufacturing sector shrank in April at the fastest pace in nearly three years, a survey showed on Wednesday, suggesting the recession that began in the first quarter could drag on for some time.

Markit’s purchasing managers’ index (PMI) of manufacturing companies stood at 43.5 in April, down from 44.5 in March, and completing a full year below the 50 level that would signal growth in activity.

It was the fastest monthly decline in activity since June 2009.

Official data on Monday showed the Spanish economy sank into its second recession in three years in the first quarter.

Economists said spending cuts aimed at meeting strict European Union deficit limits, together with a reeling bank sector, would delay any return to growth until late this year or beyond.

The eurozone’s fourth-biggest economy has not grown on a quarterly basis by more than half a percent since the beginning of 2008.

“The Spanish manufacturing PMI remained well below the 50.0 no-change mark in April, continuing the trend of worsening business conditions in the sector,” economist at Markit Andrew Harker said.

“The acceleration in the rate of contraction in new orders seen in March was followed up by a similar trend in the output index in April.”

The manufacturing PMI output sub-index fell to 41.7 in April, from 44.9 a month earlier and the lowest point since last September.

Spain has come under intense scrutiny by international markets, concerned that deep spending cuts to deflate the public deficit, an anaemic economy and high unemployment, which hit 24.4% in the first quarter, would make it the next eurozone country to seek an international bailout.

Intense competition between manufacturers prompted deep discounting, with output prices falling for the ninth straight month in April despite rising input prices, but discounts failed to kickstart new orders, Markit said.

“Further price discounting at manufacturers appeared to have a limited impact on sales, with new orders falling at a substantial pace over the month,” Harker said.