A waiter working at a bar in Madrid. | Mariscal


Spain’s services sector grew modestly for the second month in a row in July after a coronavirus lockdown decimated economic activity in April and May, but firms still shed jobs amid an uncertain future, a survey showed on Wednesday.

Markit’s Purchasing Managers’ Index (PMI) of services companies, which account for around half of Spain’s economic output, rose to 51.9 from 50.2 in June. The 50 line separates growth from contraction, and the survey hit a record low of 7.1 in April.

Wednesday’s data showed only muted growth and “most worrying of all, incoming new business failing to regain meaningful traction as the economy opened up,” said Paul Smith, economics director at IHS Markit.

“With recent reports of a spike in (coronavirus) cases, plus some countries changing advice for citizens travelling to Spain likely to weigh heavily on the country’s key tourism sector, uncertainty over the shape and speed of the recovery from the pandemic has inevitably increased.”

A sister survey of Spanish manufacturing activity on Monday showed a steeper rise to 53.5 in July from 49.0 in June.

Coronavirus restrictions were gradually lifted from May and scrapped on June 21 as contagion rates and the number of coronavirus fatalities slowed before the recent uptick.

The Spanish economy contracted 18.5% in the second quarter, the widest margin on record and one of the deepest downturns in the region.