Spain's manufacturing growth slows

Spain’s manufacturing sector growth slowed in February, burdened by output price rises, while employment fell, new data shows.

The Markit purchasing managers' index for Spain’s manufacturing, fell to 51.6 in March from 52.1 in February

But the index, which measures the performance of the economy’s manufacturers, remains in positive territory and export orders grew in contrast to weakening domestic demand.

Markit economist Andrew Harker said the first quarter of 2011 “saw steady progress on the road to recovery in the manufacturing sector, albeit with little sign of a strengthening of domestic demand.”

But inflation pressure continued to rise and the cost of goods increased to a record high in the index’s history as companies passed on the input costs to customers.

“The rate of input cost inflation was close to February’s record high in March as prices rose sharply again over the month. Cardboard, fuel, metals and plastics were highlighted as key sources of inflationary pressure,” it said.

The survey showed workloads increase to cope with new orders but employment levels falling across the board.

Purchasing rose steeply – at the fastest pace seen in 11 months – as higher workloads caused firms to buy in more materials. This caused stock shortages at suppliers that saw delivery times for materials also rise fast.

“Although the rate of production growth eased slightly in March, it remained solid and sharper than the long-run series average,” the report said.