Spain’s services activity picked up pace in Nov though new restrictions loom- PMI

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MADRID, Dec 3 (Reuters) – Activity in Spain’s services sector in November accelerated to its fastest pace in three months though renewed COVID-19 restrictions in other parts of Europe raised concerns for the future, a survey showed on Friday.

IHS Markit’s Purchasing Managers’ Index (PMI) of services companies, which account for around half Spain’s economic output, rose to 59.8 last month from 56.6 in October and the highest reading since August’s 60.1. The 50 mark separates growth from contraction.

The service industry’s strong recovery, prompted by the phasing out of COVID-19 travel restrictions, is facing downside risks though such as rising costs, including wages, and new lockdown measures in many European countries, IHS Markit said in a statement.

Operating expenses increased at the fastest pace since the survey started 22 years ago. “There were concerns about the continued upward march of operating costs, whilst recent news of returns to lockdown and growing COVID restrictions in areas of Europe meant that confidence dropped to an eight-month low,” IHS Markit said.

Hiring continued to increase in the services industry, which contributed to cost increases, IHS Markit said. The Labour Ministry Thursday said the number of jobless people last month fell to prepandemic levels.

A sister survey of the manufacturing sector showed activity growth slowing.

The Spanish statistics department INE reported in October the country’s economy expanded a weaker than expected 2% in the third quarter, raising concern about the speed of the post-pandemic recovery.

Spain’s economy had expanded a scant 1.1% in the second quarter after renewed curbs on business activity had led to a 0.4% contraction in the first quarter.

The government expects the economy to grow 6.5% this year after 2020’s record 10.8% contraction.

(Reporting by Inti Landauro; Editing by Toby Chopra)

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