MADRID (Reuters) - Factory activity in Spain kept on shrinking in January even though inflationary pressures eased and business confidence strengthened, a survey showed on Wednesday.
S&P Global (NYSE:SPGI)'s Purchasing Managers' Index (PMI) for manufacturing rose to 48.4 in January from 46.4 in December, but still remained below the 50.0 mark that separates growth from contraction.
The monthly slide, the seventh in a row, was the slowest since September, the survey said.
"The Spanish manufacturing sector started 2023 on a slightly better footing when compared to the latter half of 2022," said S&P Global's economist Laura Denman, adding that the sector appeared to be over the worst of the current downturn.
She added that inflationary pressures are likely to ease further as a result of rising interest rates and slowing consumer demand.
Optimism among manufacturers over the year ahead was at its highest since last June. "Firms were reportedly hopeful for new projects, successful product launches and stronger demand conditions," S&P Global said.
Still, Spanish economic growth is expected to slow down this year. The government has forecast 2.1% growth in 2023, down from 5.5% in 2022, while many analysts expect growth to be even slower.