The Spanish manufacturing sector fell again in November by the decline in demand amid the new wave of the pandemic which led to reducing production and cutting employment, according to the index of the consulting firm Markit. The indicator thus fell to 49.8 -from the 52.5 registered in October- in the “first deterioration of operating conditions in three months” with the fall in new orders as the main cause.
Thus, new orders fell in November at the most pronounced rate since last May, while new orders for exports fell for the first time in three months. “Amid widespread reports that the covid disease is having an adverse impact on demand, especially in sectors such as tourism and hospitality, new orders decreased at the most pronounced rate since last May,” the consultancy reports.
Despite the decrease in new orders, Spanish manufacturers in general opted to maintain their production at October volumes, although companies observed excess capacity in their plants, which led to a reduction in jobs for the first time in three months.
“November turned out to be a difficult month for Spanish manufacturers as a notable reduction in demand, especially in sectors most influenced by social contact such as tourism and hospitality, affected order books,” said Paul Smith, economist at IHS Markit, who warned that not only consumer-oriented industries were affected, but also producers of capital goods, “which is more worrying.”
However, despite the deterioration recorded in November, looking ahead the companies surveyed were generally positive about the evolution of production. Factory confidence, which reached a year and a half highs in November, was closely related to hopes that the pandemic will be under control.
“With increasingly positive news about vaccine developments, confidence about operational conditions over the next twelve months is increasing, and manufacturers are confident that once the pandemic is fully under control, activity and the demand will increase, “said Paul Smith.