MADRID (Reuters) – Factory activity in Spain contracted for the fourth consecutive month in June even though the spending of European Union rescue funds had a positive effect on capital goods, a survey showed on Monday.
The HCOB Purchasing Managers’ Index (PMI) for manufacturing compiled by S&P Global fell to 48.0 from 48.4 in May. Readings below 50 denote contraction.
“In Spain, there are signs of a mild recession for the manufacturing sector, or perhaps just stagnation,” S&P Global said in a report.
The output decline was steeper for intermediate goods and the weakness is likely to continue for the coming months as new orders overall fell for a third month in a row, the survey’s data showed.
The main bright spot is the production of capital goods which is boosted by the spending of EU’s COVID-19 rescue funds on infrastructure projects. Orders on that sub-sector has even improved, S&P Global said.
The government is estimating economic growth of 2.1% for 2023, down from 5.5% in 2022, though the country’s central bank has raised its forecast to 2.3% earlier this month from a previous 1.6%.
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(Reporting by Inti Landauro; Editing by Toby Chopra)