Spain’s manufacturing sector got off to a sluggish start in 2026, with new orders declining at their sharpest pace in nine months, even though production levels showed signs of stabilising, according to a survey released on Monday.

The HCOB Spain Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 49.2 in January from 49.6 in December, staying below the 50 threshold that separates expansion from contraction in manufacturing activity.

The data suggest that while factories are maintaining output, demand pressures remain weak, signalling challenges ahead for the sector, Reuters reports.

The drop in new orders was fuelled by caution from both domestic and international customers amid persistent global uncertainties.

Export demand fell for the fifth month in a row, experiencing the sharpest decline since last April, as high tariffs and a strong Euro against the US Dollar pressured sales.

“Spain's manufacturing sector has entered the new year on a weak footing. The deterioration in demand conditions is becoming increasingly concerning,” stated Junior Economist at Hamburg Commercial Bank, Jonas Feldhusen.

Furthermore, employment fell for the fifth consecutive month as companies reacted to shrinking order books and mounting cost pressures.

Input costs rose sharply, pushing inflation to a one-year high, driven by higher prices for raw materials such as aluminium and copper.

However, strong competition prevented manufacturers from fully passing these higher costs onto customers, resulting in a fifth straight month of lower output prices.

Despite the slow start to the year, Spanish manufacturers remain cautiously optimistic, anticipating steady demand and growth in sales volumes, supported by investment initiatives and new product launches.

Nonetheless, external challenges, including fierce competition and ongoing geopolitical uncertainties, continue to threaten the sector’s recovery.