The HCOB Services PMI for Spain remains firmly in expansion territory at 55.60 in December 2025, signaling continued growth in the services sector. This marks a slight decline from November’s 56.60 but remains above the 12-month average of 54.90. The services sector, which accounts for roughly 70% of Spain’s GDP, continues to drive economic momentum despite headwinds from global uncertainties and tighter financial conditions.

Drivers this month

• Strong domestic demand supported by resilient consumer spending.
• Moderate growth in new business orders, though slightly softer than prior months.
• Employment in services increased, but wage pressures remain contained.

Policy pulse

The PMI reading remains comfortably above the 50 threshold, indicating expansion but showing signs of moderation. This aligns with the European Central Bank’s (ECB) recent signals to maintain a cautious stance on interest rates amid persistent inflation above target.

Market lens

Immediate reaction: The EUR/USD pair dipped 0.15% in the first hour post-release, reflecting market caution over the slight PMI slowdown. Spanish government bond yields edged up by 3 basis points, signaling mild risk repricing.

Spain’s services PMI at 55.60 continues to outpace the critical 50 mark, confirming sector expansion. Compared to the previous year’s December 2024 reading of 54.30, the sector shows a modest improvement. This is consistent with broader macroeconomic indicators: Q3 2025 GDP growth was 0.40% QoQ, and unemployment fell to 12.10%, the lowest since 2008.

Monetary Policy & Financial Conditions

The ECB’s key interest rates remain at 3.75%, unchanged since September 2025. Financial conditions have tightened moderately, with the Spanish 10-year bond yield rising from 2.85% in October to 3.10% in early December. Credit growth to services firms slowed to 3.20% YoY, reflecting cautious bank lending amid inflation concerns.

Fiscal Policy & Government Budget

Spain’s fiscal stance remains moderately expansionary, with the 2025 budget deficit projected at 4.50% of GDP, slightly above the Eurozone average. Increased public investment in digital infrastructure and green services supports the sector, partially offsetting private sector caution.

External Shocks & Geopolitical Risks

Persistent geopolitical tensions in Eastern Europe and supply chain disruptions continue to pose risks. However, Spain’s diversified trade portfolio and strong tourism recovery mitigate these external shocks. The services PMI’s resilience reflects this adaptive capacity.

Drivers this month

• New business orders growth slowed to 3.50% MoM from 4.20% in November.
• Employment growth in services remained steady at 1.80% YoY.
• Input cost inflation eased slightly, reducing margin pressures.

Policy pulse

The PMI’s moderation aligns with the ECB’s cautious monetary stance. Inflation remains above the 2% target at 3.10% YoY, prompting a wait-and-see approach on further rate hikes.

Market lens

Immediate reaction: Spanish equities, represented by IBEX35, declined 0.40% post-release, reflecting investor caution. The EUR/JPY currency pair showed minor volatility, underscoring mixed sentiment.

Looking ahead, the services sector in Spain faces a mixed outlook. The PMI’s current level suggests continued expansion but at a moderated pace. Key risks include rising borrowing costs and geopolitical uncertainties, while supportive fiscal policy and resilient domestic demand provide counterbalance.

Bullish scenario (30% probability)

• PMI rebounds above 57 in Q1 2026, driven by strong tourism and digital services growth.
• ECB signals pause in rate hikes, easing financial conditions.
• Fiscal stimulus boosts infrastructure and green services investment.

Base scenario (50% probability)

• PMI stabilizes around 55-56, reflecting steady but cautious expansion.
• Monetary policy remains on hold amid moderate inflation.
• External risks persist but are contained by diversified trade and domestic demand.

Bearish scenario (20% probability)

• PMI falls below 53 due to renewed geopolitical shocks and credit tightening.
• ECB resumes rate hikes, increasing borrowing costs.
• Fiscal consolidation pressures dampen public investment.

The December 2025 HCOB Services PMI for Spain confirms ongoing sector expansion amid a complex macro backdrop. While growth momentum has softened slightly, the services sector remains a key driver of Spain’s economic resilience. Policymakers should monitor inflation and financial conditions closely to balance growth and price stability. Investors and businesses must prepare for moderate growth with potential volatility from external shocks.

Key Markets Likely to React to HCOB Services PMI

The services PMI is a critical barometer for Spain’s economic health and influences several markets. The IBEX35 index tracks domestic economic activity closely, often reacting to PMI shifts. The EUR/USD currency pair reflects broader Eurozone sentiment and monetary policy expectations. The Spanish 10-year government bond yield (EURUSD) moves with risk appetite and inflation outlook. Additionally, the BTCUSD pair can reflect risk-on/risk-off sentiment indirectly tied to economic data. Lastly, the EURJPY pair often reacts to geopolitical risk shifts impacting Spain and the Eurozone.

FAQs

What does the HCOB Services PMI indicate about Spain’s economy?

The PMI above 50 signals expansion in the services sector, a major GDP contributor, indicating ongoing economic growth.

How does the PMI affect monetary policy in Spain?

Strong PMI readings support a cautious ECB stance on rate hikes, balancing growth with inflation control.

Why is the PMI important for investors?

PMI trends influence market sentiment, impacting equities, bonds, and currency valuations linked to Spain.

Key takeaway: Spain’s services sector growth remains solid but shows signs of moderation, requiring balanced policy and market vigilance.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.