Spanish service providers recorded a further sharp increase in business activity during March as improvements in market conditions helped them to secure greater volumes of new orders. Expectations of further improvements in the wider economy over the coming year led to stronger confidence around future growth of business activity. However, there were signs of building inflationary pressures, with output prices increasing at the fastest pace since prior to the economic crisis.

The headline seasonally adjusted Business Activity Index posted 57.4 in March, down only marginally from February's 18-month high of 57.7 and signalling a further sharp monthly increase in service sector activity. The latest reading extended the current sequence of expansion to 41 months, with panellists reporting improved market conditions and higher new orders from both new and existing clients.