Why Spain Manufacturing PMI Showed a Huge Drop in August 2017

According to a report by Markit Economics, Spain’s manufacturing PMI fell to 52.4 in August 2017 as compared to 54 in July. The PMI figure didn’t meet the preliminary market estimate of 54.4. This month’s level was the lowest since September 2016.

The weaker performance in Spain’s manufacturing PMI was mainly due to the following:

• Production volume and output slowed down in August 2017.
• New business orders also weakened in August 2017.
• Job creation slowed during the month.

The iShares MSCI Spain Capped ETF (EWP), which tracks Spain’s performance, fell nearly 1.2% in August 2017. The Vanguard FTSE Europe ETF (VGK), which tracks Europe’s (HEDJ) (EZU) (IEV) economic performance, rose marginally in August 2017.

Spain’s economy has suffered a lot in the past years, mainly due to a slowdown in its economic activity. The Eurozone debt crisis in 2011 affected the performance of all the member nations of the Eurozone. However, major economies of the Eurozone are showing some improvements, signaling that the economy is gradually improving.

However, some specific problems are negatively affecting Spain’s economy. The slower domestic demand and slowed consumer sentiment vastly affected manufacturing PMI in August 2017.

In the next part of this series, we’ll analyze the final manufacturing PMI for the Eurozone in August 2017.