Spanish S&P Global Composite PMI (Jul) 56.5 (Prev. 53.3)

• "Sales growth was in part driven by firms accepting some margin compression, with selling prices rising only modestly and to the weakest degree since March 2021."
• "That was despite input price inflation remaining elevated amid ongoing reports of higher costs for energy, fuel and staff"
• "With confidence also dropping a little since June, and with ongoing uncertainty in the geopolitical outlook, it therefore remains to be seen whether July’s stellar rate of sector growth can be sustained in the near-term."

A composite print of this strength for Spain fits a pattern running through recent cycles in which Spain has consistently outgrown the euro area core, driven by services and tourism-linked activity, so a reading well above 50 is less surprising than the composition beneath it. The detail that matters here is the divergence between output and pricing: selling prices rising at their softest pace in years while input costs stay elevated is the classic margin-compression signature, and in past episodes of this kind it has tended to mark a transition from pricing-power expansion to volume-driven growth, which is less durable. For the rates channel, national PMIs of this size rarely move the euro front end on their own; what has historically mattered is whether they feed through to the flash euro area composite and the ECB's read on services disinflation, and softer output prices alongside elevated input costs is precisely the mix that has previously been read as consistent with gradual easing rather than a reacceleration risk. The drop in business confidence alongside the strong headline is the tell to watch: in comparable sequences, weakening expectations have preceded a mean-reversion in the headline within a few months. The follow-ons are the euro area composite and the country-level CPI and labour prints that determine whether the growth pulse is broadening or narrowing.