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ECONOMY

Services sector grows at fastest pace since start of economic crisis

Survey also indicates labor market is showing signs of stabilizing

Activity and new orders in the key Spanish services sector, which accounts for over half of the country’s GDP, grew at the fastest pace in over six years in December, further fuelling expectations that the economy is on track for a significant recovery this year, according to a survey released Monday by consultant Markit.

Markit’s Purchasing Managers’ Index (PMI) climbed from 51.5 points in November to 54.2 points in the last month of 2013. That was the second successive month in which the index was above the 50-point mark that denotes expansion, while the increase was the sharpest since July 2007, before the current crisis took hold.

Companies continued to shed jobs, but the pace of the decline eased for the second month in a row and was the slowest since an ongoing erosion of employment set in in March 2008. Jobs increased in the post and telecommunications and transport and storage sectors, as a number of respondents reported a fall in staffing costs.

The Labor Ministry confirmed Friday that jobless claims in the last month of the year fell by 107,570 from November to 4.701 million, the biggest fall for the month of December and the second biggest for any month in the current historical series.

Economy Minister Luis de Guindos has predicted the economy will grow at a sufficiently strong pace to allow for the net creation of jobs. According to Markit’s survey, a number of companies are forecasting improved economic conditions this year. Unemployment remains the scourge of the domestic economy, with the jobless rate at 26 percent

The economy emerged from a protracted recession in the third quarter of this year. The government’s official forecast for GDP growth for 2014 is 0.7 percent.

Markit said new orders in December increased for the fifth month in a row, with the advance the fastest in almost six-and-a-half years.

“The latest services PMI data provide real optimism that in 2014 we could finally see the start of a meaningful economic recovery in Spain,” Markit senior economist Andrew Harker said in the report. “Activity and new business rose at rates not seen since prior to the economic crisis.”

“There even look to be signs of positive movement in the labor market, with the sector coming close to seeing a stabilization in employment in December,” the report added.