Spain Services PMI Hits 58.3, Highest Since March 2023

"Service sector growth took off during July as market demand strengthened and resulted in a sizeable increase in new business," said Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank. "Firms subsequently struggled to keep on top of their workloads and recruited extra staff as a result."

Feldhusen cautioned that sales growth partly reflected margin compression and that confidence dipped from June. "With ongoing uncertainty in the geopolitical outlook, it therefore remains to be seen whether July's stellar rate of sector growth can be sustained in the near-term."

The data reinforces Spain's position as one of the euro zone's stronger performers. The euro held near $1.0920 after the release, with traders weighing the impact on European Central Bank rate expectations. A hot services print, combined with still-elevated wage pressures in the bloc, complicates the case for a September cut, though markets continue to price roughly 60 basis points of easing by year-end. A sustained run above 58 would keep the ECB's hawks vocal. The next test for the euro comes with Friday's U.S. payrolls data.