Spain’s service activity weakens in May ’25

Spain’s services sector expanded at its slowest pace in 18 months in May 2025, as uncertainty and weak international demand weighed on activity, according to HCOB PMI survey data released on Wednesday.

The HCOB Spain Services PMI fell to 51.3 from 53.4 in April, staying above the 50.0 threshold that separates growth from contraction but marking the weakest performance since November 2023. New business growth also eased sharply, and new export orders declined for the first time in six months.

Surveyed firms cited subdued client confidence and concerns over tariffs as key drags on activity. Business confidence fell to its lowest level since November, although most firms still expected output to rise over the next year.

Despite the softer demand, employment continued to rise, helping companies reduce backlogs of work for the first time since December.

Input cost inflation remained elevated—driven by higher wages and supplier prices—but moderated to its lowest level since last November. Output price inflation also slowed, as competitive pressures limited firms’ ability to fully pass on rising costs.

The broader HCOB Spain Composite PMI, which includes manufacturing, slipped to 51.4 in May from 52.5 in April, pointing to the weakest private sector expansion since December 2023.

Attribution: Amwal Al Ghad English
Subediting: M. S. Salama