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Confidence among Spanish service providers rose to a 15-month high in March despite a slight dip in the overall pace of activity, according to a closely-watched business survey.

IHS Markit’s purchasing managers’ index for the service sector slipped from 57.7 to 57.4. Analysts had predicted the decline from last month’s 18-month high, but the reading – well above the 50 level that indicates growth – still represented a “sharp monthly increase” in activity.

Respondents reported growth across every part of the services sector, which includes businesses ranging from banking to hospitality.

The rate of job creation in the sector also rose to its highest level in eight months, echoing official data released yesterday which showed the country’s jobless rate falling to its lowest level since 2010.

The PMI surveys report firms’ orders, hiring and inventories to give a picture of the overall health of the economy. The slight decline in the services figure contributed to a slip in the composite PMI for the entire economy, which fell from 57 to 56.8.

Andrew Harker, IHS Markit senior economist, said:

Service providers solidified the gains made in February during March, seeing sharp increases in activity and new business that were little-changed from those seen in the previous month. Given the historical relationship between the PMI data and GDP, we are likely to see a pick-up in the rate of growth in Q` 2017 from the 0.7 per cent increase recorded at the end of 2016.

A key aspect from the latest services survey is that Spanish companies finally gave way to pressure on their margins and increased their selling prices to the greatest extent since prior to the economic crisis. The coming months will show how client demand holds up in the face of sharper price rises.

Copyright The Financial Times Limited 2017. All rights reserved.
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