Spanish services sector slows in January on political uncertainty: PMI

MADRID (Reuters) – Spain’s services sector grew in January at its slowest pace in six years as uncertainty over new administration’s policies weigh on business confidence, a survey showed on Wednesday.

The headline Business Activity index in Markit’s Purchasing Managers’ Index (PMI) fell to 52.3 from December’s 54.9.

The index has held above the 50 line separating growth from contraction for more than six years. January’s reading is the lowest since November 2013.

Firms in the services sector, which accounts for around half of Spain’s economic output, reported lower activity last month and said sales increased at the slowest pace since September 2013, IHS Markit said.

Firms reported concerns linked to the formation of the new government and its as-yet unknown impact on economic activity, notably on wages, regulation and taxes.

“Political uncertainties were widely reported by the survey panel to be negatively influencing decision-making, leading to a stalling of decisions around investment and hiring,” Paul Smith, Economics Director at IHS Markit, said.

The data is another sign that Spain’s economic slowdown is likely to extend well into . The economy has outperformed most of the euro zone for the past few years but lost some pace last year.

According to a sister survey, Spain’s manufacturing sector contracted for the eighth month in a row in January, although at a slower pace than in December.

An uptick in unemployment numbers in January confirmed the economic slowdown.

(Reporting by Inti Landauro; Editing by Catherine Evans)

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