MADRID – Growth in Spain’s services sector slowed in March as uncertainty weighed after Russia invaded Ukraine, truckers went on strike and energy costs climbed, a survey showed on Tuesday.
S&P Global’s Purchasing Managers’ Index (PMI) of activity in the services sector, which accounts for around half of Spain’s economic output, fell to 53.4 from 56.6 in February. The index was still well above the 50 mark that separates growth from contraction.
While businesses were buoyed by the fading effects of the coronavirus pandemic, a truckers strike and uncertainty related to Russia’s invasion of Ukraine weighed on activity.
“Firms reported that clients were more cautious and a little hesitant in their decision-making,” S&P Global’s economist Paul Smith said in a report.
Still, activity encouraged companies to hire more. “Despite this relatively gloomy backdrop – which hurt general confidence – firms still faced capacity constraints, seeking to recruit additional staff wherever possible,” he said.
The slowdown in the third month of the quarter is a bad sign after quarterly economic growth in the fourth quarter had slowed to 2.2% from 2.6% in the previous three months.
The Spanish government is due to update its growth target for this year from the current 7% after last year’s post-pandemic recovery undershot its goal at 5.1%.
(Reporting by Inti Landauro; Editing by Hugh Lawson)