Spain and Italy Service Sectors See Strong July Growth

Service sectors in Spain and Italy experienced strengthened growth in July, according to data from S&P Global. In Spain, the service sector grew at its fastest pace since March 2023, with the S&P Global Spain Services PMI Business Activity Index rising to 58.3 from 54.2 in June. This surge was driven by new product launches and the strongest growth in new work since January 2025, pushing the composite PMI to a 19-month high of 56.5.

Similarly, Italy's service sector PMI rose to 52.5 from June's 50.2, exceeding analyst expectations. Italy recorded its highest new business reading of the year at 53.9 and saw its composite PMI reach its highest level since November 2025. This growth aligns with a revised economic outlook from the Ufficio parlamentare di bilancio, which projected 2026 full-year growth of 0.9%, surpassing the 0.6% forecast previously issued by the Italian government.

Both nations reported easing input cost inflation, though Spanish businesses noted that expenses remained elevated due to fuel, energy, and staff costs. While service growth was robust, Spain saw a marginal decline in manufacturing output, and Italy's manufacturing growth slowed. Additionally, business confidence in Spain declined from June levels due to domestic and international political uncertainty.