Spain services growth accelerates despite cost surge, PMI shows

Oct 5 (Reuters) - The expansion in Spain's service sector picked up pace in September as increased demand lifted activity despite a surge in operating expenses, a business survey showed on Monday.

• The S&P Global Spain Services PMI Business Activity Index rose to 58.3 in September from 57.8 in August, a survey by S&P Global showed. September's reading matched the 3-1/2-year high hit in July. The 50-mark separates growth from contraction.

• New business increased for a fifth straight month, although the pace slowed to its weakest since June. Export business fell for the first time since May as firms cited uncertainty linked to the war in the Middle East and AI-related spending.

• Employment rose again, extending the current run of job creation to four years, and the latest increase was marked and above the survey average.

• Cost pressures intensified sharply. Input price inflation jumped to a six-month high, driven by energy, fuel and labour costs as well as higher supplier charges. Firms raised their own prices at the fastest pace since April.

• The sentiment indicator weakened to a four-month low as geopolitical uncertainty and competitive pressures weighed, although firms still remained optimistic about the year ahead.

• "Although a slowdown in the rate of new business gains implies that the present pace of activity growth may not be sustained, order book trends remain positive overall, and firms are widely expecting to raise investment and add further to their staffing levels in the months ahead," said Paul Smith, Economics Director at S&P Global Market Intelligence.

(Reporting by Reuters; Editing by Toby Chopra)