Spain's service sector expands for seventh month running in May: Purchasing Managers' Index

MADRID: Spain's service sector grew in May, albeit at a slower rate than a month earlier, as the country's economic recovery continues after years of recession, a survey showed on Wednesday.

Markit's Purchasing Managers' Index ( PMI) of service companies stood at 55.7 in May, down from 56.5 in April but well above the 50 line separating growth from contraction for the seventh straight month.

"There was further evidence of a reluctance among companies to increase staffing levels at a rate comparable with growth of new work, despite another build-up of outstanding business and strong optimism regarding the prospects for growth of activity," said Andrew Harker, economist at Markit.

"This likely reflects attempts to limit costs in order to protect margins in a competitive marketplace."

Spain's economy emerged from a two-year recession in the second half of last year and is expected to grow at more than 1 per cent this year. But unemployment remains high with over one in four workers out of a job. The PMI's service sector employment index slipped to 51.5 in May from 52.0 in April.

The service sector is worth around half the country's total economic output.