Spain services grow for 1st in over 2 years in August

 

Spain's service sector grew in August for the first time since June 2011, a survey showed on Wednesday, in the latest sign the beleaguered economy may emerge from a 2-year recession in Q3.

Markit's Purchasing Managers' Index (PMI) of service companies stood at 50.4 in August, up from 48.5 in July, marking its first rise above the 50 line separating contraction from growth in more than 2 years.

"Coming on the back of a return to growth of manufacturing output, as highlighted by the manufacturing PMI earlier this week, this rise in services activity reinforces the view that Spain will exit technical recession in Q3 of 2013," economist at Markit Andrew Harker said.

Spain's manufacturing sector grew in August for the first time since April 2011, a poll showed on Monday.

Spain's economy has been in recession since mid-2011, the 2nd since a decade-long property bubble burst in 2008, though the government has said it expects to see quarterly growth in the 2nd half of 2013.

The private services sector, which makes up around a half of the country's economic output, has been hit hard by sliding domestic demand as consumers keep a tight hold on expenses in the face of record high unemployment.

"Concerns remain, however, and this is highlighted by a quickening pace of job cuts despite rising workloads. Companies are reluctant to hire workers while solid, sustainable growth remains elusive and the outlook is still an uncertain one," Harker said.

The Markit index for service sector employment fell to 45.9 in August from 46.5 a month earlier. According to Markit, employment activity in services has fallen every month since February 2008.