THE rate of the downturn in the Spanish manufacturing sector eased to its slowest pace since January 2008 in February as exports helped boost new orders, Markit's Purchasing Manager's Index showed yesterday.

The manufacturing sector shrank for the 27th consecutive month in February, with the index at 49.1 compared to 45.3 in January, still below the 50 mark which separates growth from contraction.

The Spanish economy lingered in recession in the last quarter of 2009 as many of its European neighbours' economies returned to growth, weighed down by sluggish domestic demand and massive unemployment. “Although the manufacturing sector neared stabilisation in February, PMI data suggest that domestic demand in particular remains weak, with panelists reporting a lack of confidence among clients,” said Markit economist Andrew Harker. The 3.8 point rise in the headline index will bring some comfort to the Spanish government, which expects the economy to begin to expand again in 2010 lifted by exports following the collapse of its key growth sector of property construction. On Thursday the EU Commission predicted the Spanish economy would shrink 0.6 percent over the course of 2010.