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Activity in Spain’s service sector continued to expand at the start of the year, according to a closely-watched business survey from the eurozone’s fourth largest economy.

IHS Markit’s monthly purchasing manager’s index of Spanish service companies hit 54.2 last month, falling back from 55 in December, but still comfortably in growth territory (any figure above 50 marks expansion).

Even more encouragingly for Spain’s robust economic recovery, businesses reported their highest level of 12-month optimism since last April. Employment, new business and output also rose in the month said Markit.

Spanish companies also reported rising prices last month, as producer price inflation is on the march across the eurozone on the back of accelerating energy costs.

Markit noted that despite rising employment, the pace of job growth had softened to a three-month low. Spain has made impressive inroads into reducing its double digit inflation which now stands at 18.6 per cent, its lowest since 2009 (see chart below).

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