Spanish factory activity grows in Dec at slowest pace since Feb -PMI

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MADRID, Jan 3 (Reuters) – Spanish factory activity grew in December at the slowest pace in 10 months as accelerating inflation and supply-chain bottlenecks hampered production, a survey showed on Monday.

IHS Markit’s Purchasing Managers’ Index (PMI) for manufacturing in Spain fell to 56.2 in December from 57.1 in November. The reading was well above the 50.0 mark that indicates an expansion in activity, though the pace was the slowest since the 52.9 recorded in February.

“Price indices remained extremely high, with firms signalling severe inflationary pressures that were having a detrimental impact on client demand,” said Paul Smith, an economist at IHS Markit.

Business people surveyed said prices of most raw materials as well as energy, electricity and transportation services were up during the month.

The Spanish statistics office INE reported last month that producer prices rose 33% in the 12 months through November, the fastest pace since it started tracking the indicator in 1976.

That and other data have raised concerns about the post-pandemic recovery. The government is estimating 6.5% economic growth in 2021 after a record 10.8% contraction in 2020. The IMF recently lowered its own 2021 forecast for Spain to 4.6%.

(Reporting by Inti Landauro; Editing by Hugh Lawson)

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