The industry registers the largest contraction since the pandemic in July: "Sales have plummeted"

The

began to

in which the collapse of orders caused the biggest

in the last year and a half.

The lower demand, together with the

and the loss of confidence, caused the

for the sector to register its lowest level since May 2020, when Spain was going through the worst moments of the pandemic.

This indicator, published this Monday by

stood at

in July , below the 52.6 registered in June and

.

For the first time in a year and a half, the index remains below the 50-point level that defines the border between growth and contraction of an economic sector.

“The manufacturing sector saw the

in July. Surveyed companies reported that

due to an increasingly uncertain environment, with some companies forecasting a

in the second half of the year.

High prices also weighed on demand, while similar factors also led to a comparable decline in new export orders," S&P explains.

The lack of new orders forced the machines to stop, which is reflected in the

.

In fact, the excess production was used to complete the contracts they had pending and which decreased at the fastest rate in almost two years.

In addition to suffering a collapse in demand, companies had to face an

, especially derived from the rise in fuel and energy prices, the main sources of

.

To weather it, they tried to

warehouse inventories, and many "had no choice but to

Adding to these issues were also the supply chain

that persisted, reflecting inventory and logistical challenges between suppliers.

However, the degree of lengthening of delivery times was the weakest recorded by the study since the end of 2020.

All this cocktail caused

also reflected in the PMI, to fall to one of the

"High inflation, the ongoing war in Ukraine and fears of an escalation of an economic recession in the final months of 2022 served to undermine optimism."

Layoffs for the first time in a year and a half

These concerns in turn fed into

decisions , as the level of

in July.

"High inflation, together with the considerable short-term economic uncertainty currently existing in Spain and around the world, severely damaged the manufacturing economy in July. Demand suffered a notable reduction, both in the domestic and international markets, which caused a contraction in production for the first time in a year and a half," says

director of economics at

Looking ahead, he believes that "

for production

" and that "this downward trend is also seen in business expectations, which plummeted notably to a level similar to that seen last March, when the escalation of the conflict in Ukraine began".

"Companies are increasingly concerned

about the continuation of the economic

in the coming months and are therefore taking increasingly defensive positions, as evidenced

warn.

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