The NTC Purchasing Managers' Index (PMI) is a composite indicator measuring the health of manufacturing industry, and it once more fell below the 50.0 mark separating growth from contraction, reaching the quite low level of 46.4, its lowest since December 2001, down from 46.7 in February. So, to be clear, Spain's manufacturing sector is contracting, and has been contracting for some months now, and the news today is that the rate of contraction seems to be accelerating.
This was the fourth successive month of negative territory for the Spanish PMI, painting an ever bleaker picture for the euro zone's fourth biggest economy.
The output index fell to 43.7, its lowest in the survey's 10-year history, while new orders fell to 45.3, the lowest in just over six years. Firms complained of reduced domestic demand, with many blaming weakness in the construction sector.
"Spain is entering a particularly dire phase in terms of weak domestic demand ... and its performance is having an impact elsewhere (in Europe)," said Chris Williamson, chief economist at NTC Research.
NTC said unemployment in the manufacturing sector rose for a seventh successive month in March, reflected in the employment index slipping to 47.8 -- its lowest since April 2005 -- from 48.3 in February.
"Given the recent trend, the manifesto pledges of the (ruling Socialist party) to bring the unemployment rate down to around 7 percent and to create 2 million extra jobs during its next four-year term appear at the outset difficult to achieve," said Nathan Carroll, economist at NTC Economics.
At the same time inflation pressures continued to build up. While input prices rose, output prices fell, stretching companies' margins as they cut prices to attract new business. The rate of cost inflation accelerated for the fourth month running and was the sharpest since last July.
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