According to the report from IHS Markit, Spain’s service sector extended its recent recovery into May, expanding at its strongest rate since August 2015 as a lifting of COVID-19 restrictions led to a more widespread reopening of business units and a noticeable uplift in demand.

The headline Business Activity Index rose to 59.4 from 54.6 in April. That signalled a back-to-back increase in activity levels and the single strongest monthly growth recorded by the survey since August 2015.

Underpinning the rise in activity was a strong rise in new business volumes (the best since the start of 2018). Panellists widely reported that the lifting of COVID-19 restrictions had led to not only further business unit re-openings, but also a noticeable rise in demand and sales, especially from domestic sources. Although there were some signs of strengthening foreign demand and a first rise in overall new export business for the first time in over two years, the rate of growth was modest and much lower than for total new work. With sales rising noticeably, capacity was tested somewhat. Backlogs of work outstanding rose for the second month in succession, and at the sharpest pace since July 2015. In response, companies added to their payroll numbers, and May data indicated a second successive monthly increase in overall service sector employment. The rate of growth was also the sharpest recorded by the survey for over two years.

Confidence in the outlook also encouraged companies to take on additional staff. Once again over 60% of surveyed firms anticipate a rise in activity from present levels in 12 months’ time, and overall confidence was only slightly lower than in April when sentiment was at its most positive in over 17 years. Expectations continue to be supported by positive projections for sales and demand as COVID-19 restrictions are lifted in line with hoped for success with vaccination programmes.