Spain December manufacturing PMI 49.6 vs 51.0 expected

Spain's manufacturing sector entered contraction territory in December, as the PMI dropped to 49.6, below the expected 51.0. This marks the first contraction since April, driven by declines in both output and new orders. Weaker demand conditions and the decision by manufacturers not to renew temporary labor contracts resulted in the largest monthly employment drop in two years. While the Spanish manufacturing industry remains more resilient than its German and French counterparts, concerns are rising about the potential for a longer downturn. HCOB highlights that it's still unclear whether this downturn could persist. However, there is a suggestion that this decline may be a temporary dip. External demands pose growing risks with weaknesses among key European partners and a strong euro complicating matters. A notable drop in raw material prices has reduced input costs but forced many firms to cut selling prices, further squeezing margins.