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Spain manufacturing growth rate shrinks in April-PMI

Source: Reuters - Mon 2th May 2011

Spain's manufacturing sector expanded in April for the seventh straight month, but at the slowest rate since November as output growth rates slowed and lay offs continued, a survey showed on Monday.

Markit's purchasing manager's index for manufacturing fell to 50.6 in April from 51.6 in March, holding above the 50 mark separating growth from contraction after last shrinking in September.

Those surveyed reported a growth in new orders but said the expansion was mostly driven by a sharp increase in new export orders rather than from the struggling home market.

"Output and new order growth remained worryingly weak in April, and even slowed again over the month. While ongoing strong export demand is a welcome sign, there are few indications of a recovery in the domestic market," economist at Markit Andrew Harker said.

"As long as this remains the case, the manufacturing sector will continue to register only meagre production growth, and firms will hold off on hiring staff."

Spain crawled out of an 18-month recession at the start of 2010, but has suffered minimal growth ever since and has only avoided tipping back in to recession due a growing export sector as consumer demand remained stagnated.

Manufacturing output slowed its pace of growth to the lowest level since November, registering 52.0 in April compared to 53.3 a month earlier, while companies reported that levels of employment shrank.

Employers surveyed by Markit have reported lay offs for 43 of the last 44 months.

Spanish unemployment is more than double the European Union average and the highest in the region, badly hit by the collapse of the construction sector following a burst property bubble and with more than 40 percent of under-25s out of work.

The country traditionally suffers relatively high unemployment rates due, in part, to the seasonal nature of its jobs market which is highly dependent on the tourism industry and agriculture.

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