The services sector contracts after nine months on the rise and anticipates a "GDP contraction in the third quarter"

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The service sector contracted in Augusto After ten straight months of expansion, as activity levels and new orders declined for the first time since last October, according to the PMI index published this Tuesday by the S&P rating agency, which anticipates, according to its model, a drop in GDP in the third quarter.

“Summer is coming to an end and with it comes the good mood among Spanish service companies, including the tourism sector. Activity in this sector contracted for the first time this year and the same happened with the services sector in general, new orders and orders pending fulfillment. Therefore, things are likely to continue to slow down during the next few months. Our real-time estimate of GDP, which takes into account the PMI indicators, is indicating a contraction of GDP of 0.1% in the third quarter. This could cast some doubt on the Bank of Spain’s recently raised prediction of 2.3% GDP, especially if we also see a further drop in economic activity in the next quarter,” he warned. Cyrus de la Rubia, chief economist at the Commercial Bank of Hamburg, which compiles the index together with S&P.

When this indicator -which is adjusted for seasonal effects- is above 50 points, it indicates a general increase compared to the previous month, while if it is below 50 it indicates a general decrease. In August, the PMI for business activity in the service sector fell from 52.8 points registered in July to 49.3, “Ending the previous nine-month expansion sequence.” “Although the deterioration of the activity of the Spanish service sector was only slight in general, the rate of decline was the strongest in just under a year,” they said.

As in the manufacturing industry, the survey confirmed that the conditions were “especially weak” in terms of foreign market demand. Data for August signaled a renewed contraction in new orders for exportwhich was the steepest in ten months.

Given the drop in demand, companies in the sector slowed down the pace of hiringIn fact, unemployed personnel accumulated in the companies, which they took advantage of to update their pending tasks.

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