Spain's economy flirts with recession as PMI stays in contraction

Spain's economy flirts with recession as PMI stays in contraction

The latest eurozone composite PMI, compiled by S&P Global, came in at 49.5 points in June. Although this is a slight improvement on May's 48.5, it remains below the 50 threshold that separates growth from contraction. It is the third consecutive monthly decline, and the services sector, which carries so much weight in Spain, is also showing signs of slowdown.

Tourism and care work: a 19th-century model

While official indicators point to a slowdown, some observers argue that two engines — tourism and immigration — are artificially propping up activity. Packed terraces do not hide the fact that the economy relies on low-productivity sectors. "Tourism and care work," some analyses quip, calling it a "19th-century economy." The daily arrival of thousands of people at Barajas airport, which some put at up to 5,000 a day, sustains aggregate demand through volume, not efficiency.

The housing house of cards

The industrial and services slowdown threatens to deflate a property market that, despite high interest rates, has yet to correct. The official narrative insists on recovery, but those expecting an adjustment urge caution: when credit becomes more expensive and activity slows, housing prices tend to trinc. For now, there are no signs of a "black swan," but the fragility of the model is laid bare.

With these figures, the question is not whether the recession will arrive, but when the official indicators will stop glossing over a reality that, for some, has been entrenched for years.