The services sector grows but confidence collapses: "The fear of a recession is increasingly common"

• Companies and experts warn of a "worrying slowdown in employment" and "more uncertainty" in the fall

Companies

in Spain experienced an

, unlike the industry that saw the biggest drop in production in a year and a half, but

in the future

The

for this sector, published this Wednesday by S&P, stood at

in July , slightly below the 54 points in June but still well above the 50-point limit that marks the difference between contraction and the growth of an economic sector.

"The July survey reveals a continued expansion of Spain's services sector, as businesses recorded another

and a

. Additional staff were again hired, allowing businesses to keep the day workloads in general", explains the firm.

The main problem they experienced was, for yet another month,

, which continued to make companies' costs more expensive and, at the same time, began to affect customer consumption.

"The rate of increase in costs remained considerable.

upward price pressure, while there were also reports that

were adding to the increase in operating expenses", they point out.

It's hard not to be a little worried about economic growth in the coming months.

Paul Smith, S&P Chief Financial Officer

This increase in costs again led companies to

"whenever possible", in fact S&P notes "a strong degree of increase in the rates charged".

Despite strong sales performance in July, "upward price pressures and a generally unstable global economic and political environment" weighed on business confidence going forward.

"

in the second half of the year

The net result was a

to its lowest level since August 2020."

Paul Smith

, Director of Economics at

, noted that "activity expanded at a solid pace in July, supported by higher levels of new orders and new job creation," but warned that "

, as a close look at the survey data revealed some

this month.

"As the uptick in activity related to the easing of pandemic restrictions continues to fade, businesses surveyed reported

due to rising

and

. Some of the companies surveyed commented that figures for tourism, a major driver of the Spanish economy, are generally lower than normal.Consequently, confidence in the future plummeted notably, posting a sharp monthly decline compared to June, and adds to the growing possibility that the sector will face an increasingly challenging climate in the coming months," he added.

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