MADRID, Nov 2 (Reuters) - The contraction in Spain's manufacturing sector eased in October from September, but a worsening dip in new orders darkened the picture, the Markit Purchasing Managers' Index (PMI) showed on Monday.
The manufacturing PMI rose to 46.3 from 45.8 in October, marking a slight improvement on a monthly basis but still below the 50 mark dividing contraction from expansion and less than a consensus forecast of 47.5.
"Spain's recovery continues to lag the upturn seen across the euro zone as a whole," said Andrew Harker, economist at Markit.
"The acceleration in the rate of contraction of manufacturers' order books in October will be of particular concern as it points to a further delay to any prospects of stabilisation."
New orders fell to 46.1 in October from 48.7 in September, the sharpest contraction since May, suggesting clients remained cautious when making purchasing decisions and amid intense competition, the Markit survey showed.
The new orders index has shrunk for 19 of the last 21 months.
As larger euro zone economies, such as Germany and France, and global powers such as the United States, show signs of economic recovery, Spain is expected to report its fifth consecutive quarter of GDP contraction in the third quarter.
The government does not expect Spain to emerge from the recession, which began in the third quarter last year, until the second quarter of 2010.
Rising energy prices showed signs of hampering growth within the Spanish economy in October, as input prices rose for the second consecutive month but output prices dropped, amid competition between manufacturers fighting for sliding orders.
"Competition is so intense that firms are being forced to slash prices, despite their raw material prices increasing," Harker said.
The Markit data also managed to throw cold water on positive noises from the government on the jobs market after it reported unchanged levels of unemployment in the third quarter compared to the second at 17.9 percent.
"The stabilisation of unemployment in the third quarter signalled by official figures is likely to be only temporary with PMI data continuing to show considerable falls in employment in the manufacturing sector as firms seek cost cuts," Harker said.
Staffing levels in Spanish manufacturing firms have fallen every month for the past 26 months, the PMI data showed. (Reporting by Paul Day; editing by Stephen Nisbet)