Spain now helping eurozone as recovery continues

Cast your mind back less than a year and think about how Spain was perceived across much of Europe. As the continent wrestled with recession, Spain was decried as the poster child for all that was wrong with monetary union: a failed state, full of lazy and uneducated people, a drain on the hardworking countries of the north.

Well, no longer. As Spain’s economy is set to perform strongly in 2014 following an encouraging end to 2013, the country is actually set to compensate for other, less robust economies in the eurozone as 2014 starts to take shape…

According to a survey of the continent’s purchasing managers, Spain’s service sector and private sectors are helping to take up the slack caused by an under-performing French economy. The study of 5,000 firms across the currency area found that confidence in Spain was extremely high, buoyed by official figures from Markit’s Purchasing Managers Index (PMI) that put Spain’s performance ahead of the eurozone average.

So what does this mean? It indicates that businesses in Spain have ceased cutting jobs and have begun creating new employment – the first time for 23 months straight that this has happened. With key decision makers and opinion formers throughout Europe’s leading industry sectors clued-up to the fact that Spain is on the mend, opinion towards the country will turn favourable, leading to greater investor and consumer confidence, more jobs and a more robust and diversified economy.

That is the hope, at least. Spain’s service sector in December enjoyed its largest expansion since mid-2007, while its real estate market is beginning to look healthy once more. These trends give credence to the belief that Spain really has turned a corner.

“The latest services PMI data provides real optimism that in 2014 we could finally see the start of a meaningful economic recovery in Spain,” said Andrew Harker, an economist at Markit. “Activity and new business each rose at rates not seen since before the economic crisis, although the extent to which companies are relying on discounting to support growth of orders remains a worry.”