Spain services growth hits 2026 high in June, PMI shows

MADRID, July 3 (Reuters) - Spain's services sector expanded at its strongest pace this year in June as activity and new business rebounded on stronger domestic demand, a business survey showed on Friday.

The Spain Services PMI Business Activity Index rose to 54.2 in June from 50.1 in May, according to the survey by S&P Global.

The 50-mark separates growth from contraction.

"June's survey pointed to a noticeable bounce in activity and sales following a lacklustre couple of months," said Paul Smith, economics director at S&P Global Market Intelligence.

"Some of the upswing is in part reflective of a growing optimism that the disruption to supply chains and hit to sentiment caused by the war in the Middle East will in time dissipate following the recent memorandum of understanding signed by Iran and the U.S.," Smith added.

New business increased at the fastest rate in six months, while export sales were little changed after declines in every previous month of 2026. Firms linked the improvement mainly to stronger domestic demand and market activity.

Employment growth picked up to its strongest since March, extending the current run of job creation to 45 months. Backlogs of work rose for the third time in four months and at the fastest pace since August 2025.

Confidence strengthened to a four-month high, helped by hopes of stronger sales and an easing in Middle East tensions. Input cost inflation slowed to a four-month low, while output price inflation eased for a third month to its weakest since January.

The broader S&P Global Spain Composite PMI rose to 53.3 in June from 50.2 in May, with services driving the improvement as manufacturing output fell for the first time in three months.

(Reporting by David Latona; Editing by Toby Chopra)