FX.co ★ Spain Manufacturing Sector Shrinks For 2nd Month

The HCOB Spain Manufacturing PMI experienced a slight decline to 49.2 in January 2026, down from 49.6 in December, falling short of market forecasts of 49.9. This marked the second consecutive month of contraction and represented the weakest index reading since April 2025, primarily due to a rapid decline in new orders. Export orders dropped for the fifth consecutive month, affected by tariffs, the increased strength of the euro against the US dollar, and subdued demand from European markets. Nonetheless, production levels remained relatively stable, experiencing only a marginal increase, enabling firms to further reduce their work backlogs. Stocks of finished goods decreased for the fourteenth month, while purchasing activities were scaled back for the second consecutive month. Employment continued its downward trend, shrinking for the fifth month in a row. Regarding costs, input expenses rose significantly; however, intense competition and subdued demand restricted manufacturers from effectively transferring these higher costs onto consumers. Despite these challenges, manufacturers maintained a notably optimistic outlook for the future, expecting a possible revival in economic growth.