S&P Global Spain Services Purchasing Managers Index (PMI)

Spain's Markit Services Purchasing Managers Index (PMI) is a macroeconomic report, which demonstrates the economic activity in the Spanish service sector based on information received from a monthly survey of purchasing managers from the largest companies. The index is prepared by Markit Economics. The company prepares a report on the service sector on behalf of the Reuters agency. The index calculation implies the evaluation of corresponding characteristics: respondents determine whether the situation has improved, deteriorated or has not changed. The responses are evaluated taking into account the significance of surveyed companies.

Often purchasing managers can track changes in market conditions prior to other company employees, because purchases precede company's production activities. The survey involves managers who can track the above changes. Markit Economics try to cover the country's largest companies in this sampling. A group of 500 firms which most accurately reflect the service sector is selected from all companies. They receive questionnaires on a monthly basis. Answers to questions contained therein are used to compile a report which includes the following data:

• Business activity
• New orders
• Pending orders
• Prices received for produced services
• Prices paid (for materials and services purchased in the production process)
• Employment level
• Near-term business activity forecast

The Markit Services PMI only includes data about private companies. Respondents provide a relative assessment of the related parameters and determine whether the situation has improved, deteriorated or has not changed. Individual subindexes are calculated based on these answers. These subindexes characterize inflation, employment and other key indicators of economic activity. The index is seasonally adjusted. Readings above 50 indicate the service sector growth and can have a positive effect on euro quotes. Lower values may indicate possible decrease in economic activity. Readings below 42 can be an indication of possible recession. A value higher than expected can be seen as positive for the euro quotes, while a lower value is usually seen as negative.

The service sector PMI is considered one of the most important indicators and thus analysts perform its detailed monitoring. It is also a leading indicator of economic activity in the service sector and of inflation.