Spanish Feb services activity bounced back from pandemic-induced dip in Jan -PMI

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FILE PHOTO - A waiter opens an umbrella at a restaurant in the Andalusian capital of Seville, southern Spain

MADRID – Activity in Spain’s services sector bounced back in February from a brief contraction in January, when restrictions on travelling and socializing were reimposed to curb the Omicron variant of COVID-19, a survey showed on Thursday.

IHS Markit’s Purchasing Managers’ Index (PMI) of services companies, which account for around half Spain’s economic output, rose to 56.6 last month from 46.6 in January, when the indicator was below the 50 mark separating growth from contraction for the first time since March 2021.

“A positive month for Spain’s service sector, with activity and new business rebounding sharply as the adverse impacts of the Omicron wave dissipated,” IHS Markit’s economist Paul Smith said in a report.

“Confidence about the future improved,” IHS Markit said.

However, concerns about rising operating costs and input prices persisted during the month. Most business people polled said they passed on cost increases to their customers, the survey showed.

The expansion is good news since the January contraction cast some doubt over the speed of the recovery in the first quarter of the year. Quarterly economic growth in the fourth quarter had slowed to 2% from 2.6% in the previous three months.

The Spanish government is targeting 7% growth in 2022 after last year’s post-pandemic recovery undershot its goal at 5%.

(Reporting by Inti Landauro; Editing by Hugh Lawson)