Services Drive Economic Momentum in Spain as Private Sector Accelerates Despite Industrial Pressures

Madrid | EcoPulse24

The services sector in Spain strengthened its position as the primary driver of economic activity in December 2025, with the overall private sector showing a more robust pace of expansion compared to the previous month. This was supported by improved demand and new business, while manufacturing slipped back into contraction.

According to HCOB data, the Services Purchasing Managers’ Index (PMI) reached 57.1 points in December, up from 55.6 points in November and beating market expectations of 54.5 points. This marks the strongest expansion in services activity since December 2024 and the twenty-eighth consecutive month of growth, remaining above its long-term average.

This performance was driven by higher inflows of new business and commercial activity, indicating clear improvement in underlying demand, alongside increased external sales supported by stronger demand from major European markets. Conversely, backlogs of work declined for the first time in six months, while employment accelerated in response to higher activity levels. On the pricing front, inflation reached a three-month high due to increased supplier and energy costs, prompting businesses to pass some of the pressure onto clients through higher selling prices. Business confidence also improved to its highest level since March 2025.

Meanwhile, Spain’s Composite PMI rose to 55.6 in December from 55.1 in November, marking the twenty-fifth consecutive month of private sector growth, though the gap between sectors widened. Services continued to accelerate, while manufacturing returned to contraction at 49.6 points from 51.5 previously, amid declines in new business and employment.

The data also showed a drop in backlogs across both sectors, reflecting excess capacity in the private economy, despite overall business confidence reaching an eleven-month high. This comes as input cost inflation accelerated to its highest since September of the previous year.

Analysis:
The overall picture suggests that Spain’s economic momentum is increasingly reliant on services, amid clear recovery in domestic and external demand, while manufacturing remains fragile under cost and operational pressures. This divergence may shape near-term economic performance, with services likely to remain the main growth engine unless the industrial sector regains balance.