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The pace of growth in Spain’s manufacturing sector slowed unexpectedly in February, with a closely-watched indicator falling to 54.8 from 55.6 in the previous month.

Analysts had expected the purchasing managers’ index, published by IHS Markit, to rise to 55.8, which would have put it in line with close to a two-year peak reached in May 2015.

The 54.8 reading was the lowest since November but is still at the higher end of the range in the past two years, beaten only by higher readings in the past two months.

Markit said that the figure, while lower than January’s number, was still “a solid monthly improvement in the health of the manufacturing sector” but noted that price pressures were having an increasing impact.

Commenting on the data, Andrew Harker, senior economist at IHS Markit said:

The Spanish manufacturing sector continued its strong start to the year in February, with improving demand continuing to support marked rises in new orders and production.

Price pressures appear to be having an increasing impact on the sector, however, with the rate of cost inflation quickening for the sixth month running. In fact, some firms reported increasing their input buying and inventories of purchased items in February in an effort to mitigate the effects of further raw material price rises in coming months.

Building inflationary pressures will continue to test the resilience of client demand, which up until now has been able to withstand price increases.

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