Spanish Economy: Double Dip Danger
January 15th, 2010
Accelerating decline in Spanish private sector services activity in December raised fears of renewed recession on the Iberian peninsula, a well-watched survey said on Wednesday.
“It is worrying to see Spain showing signs of a double dip’ recession and lagging so far behind the other large euro area service economies,” said Markit economist Rob Dobson as purchasing managers’ index (PMI) data was released.
“The overall picture of improving health masks severe national divergences, however, with both France and Germany appearing to be fighting fit but Spain displaying worrying symptoms of slipping back into recession.”
Private sector business grew across the eurozone as 2009 drew towards a close, with composite PMI figures compiled by his group, taking in manufacturing data, rising to 54.2 points from 53.7 points in November.
That marked its highest reading for 26 months, with the upturn led by strong manufacturing gains but supported by similar expansion in services throughout continental Europe, despite a slight downgrade from an earlier flash estimate.
The final services index posted 53.6 points in December, down from the anticipated 53.7 but up from 53.0 points in November, which represented the fastest rate of growth across the 16 countries using the euro since late-2007.
Growth was firmly led by France and Germany, but the major disappointment from Spain was joined by news that activity in Ireland declined for the 23rd successive month, albeit at the weakest rate since the start of the run.
Nevertheless, Dobson said 2009 had clearly ended on “a positive note,” stressing that “the recoveries in both the manufacturing and service sectors are gaining traction and the labour market is moving closer to stabilisation.”
Howard Archer of IHS Global Insight said the further rise in the services sector — the engine for modern economies — suggests overall fourth-quarter 2009 growth of at least the 0.4 percent posted in the previous three months.
However, he warned that the eurozone services sector “is by no means completely out of the woods yet” citing “significant financial sector problems, muted consumer expenditure and relatively limited business spending.”
Story from Business Report
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