Activity in the Spanish industrial manufacturing sector returned to growth in July for the first time since February, although it continued to destroy jobs due to the effects of the coronavirus epidemic, according to consultancy Markit. The IHS Markit PMI index for the Spanish manufacturing sector published on Monday stood at 53.3 points in July, above June 49 and slightly exceeding the 50 point threshold, which marks the difference between growth and decrease.
The manufacturing economy of the euro area as a whole also registered its first expansion in a year and a half in July. The index registered 51.8 in July, above the 47.4 of the previous month. By country, Spain was the country with the best overall result. The increases in France and Austria, although slower, were still strong, while Germany and Italy recorded modest growth. Only two countries, Greece and the Netherlands, recorded readings below the 50 threshold.
The resumption of activity after confinement resulted in an increase in production and orders, which recorded the best data since the beginning of 2018, as well as foreign demand and company purchases. However, activity levels remained low, with a decrease in pending orders, which translated into a cut in employment for the fifteenth consecutive month.
“Employment numbers remain a major concern, especially as the labor market is likely to be key to determining the economy’s recovery path,” said Chris Williamson, chief economist at IHS Marktin. “Although the job loss rate decreased, it is still higher than at any other time since 2009, reflecting the widespread reduction in costs in many companies where the virus outbreak has strongly affected profit margins. The increase in Unemployment, job insecurity, the second wave of virus infections, and social distancing measures still in place will inevitably limit recovery. ”