Spanish manufacturing returns to growth with best outlook since March 2011

Spanish manufacturing orders are much better than expected for August, with Markit's purchasing managers' index rising from 49.8 to 51.1.

Any number above 50 implies expansion, and analysts had expected a jump to just 50.1.

Sub indices fared slightly worse, with employment in the manufacturing sector down to 45.8, a four month low.

Andrew Harker, senior economist at Markit and author of the report, said:

The news from the Spanish manufacturing sector improved again in August, with PMI data highlighting a first rise in output for 28 months. As has been the case in recent months, exports were the key source of positive momentum as growth quickened sharply.

Firms appear still to doubt the sustainability of the current improvements, however, opting to raise output only modestly and often using existing stocks to meet new order requirements.