Employers’ association warns that companies are already adapting their production, even with time savings and temporary closures, to cope with sharply increased costs
Spanish factories are starting to shut down their machines, pushed by the energy crisis, which is driving production costs not seen in decades. This follows from Spain’s July PMI manufacturing indicator released by S&P on Monday, which fell from 52.6 the previous month to 48.7 points, below the 50-point threshold for the first time since May 2020 shrinkage separates.
The deteriorating health of the industrial sector largely reflects a significant decline in new orders as demand weakened at a time of strong inflationary pressures and widespread economic uncertainty.
The companies surveyed reported that revenues have fallen as a result of an increasingly uncertain environment, with some companies anticipating a recession in the second half of the year, according to S&P, warning that high prices also affected demand, while factors new export orders.
High inflation, the ongoing war in Ukraine and fears of an escalating economic downturn in the final months of 2022 undermined optimism. Those concerns filtered through to hiring decisions, as employment levels fell for the first time in 17 months in July.
Along the same lines, the employers’ association of small and medium-sized companies, Cepyme, warns that Spanish SMEs are already putting in place their own contingency plans to cope with the sharp increase in costs, which is affecting the margins of the majority of companies. .
“The increase in energy prices, especially added to the sharp increase in raw material prices, is reducing the production and business capacity of Spanish SMEs,” says Cepyme.
Faced with this uncertain situation, the organization led by Gerardo Cuerva warns that companies have already started taking measures such as adjusting their schedules due to the rise in energy prices, restructuring their production plans, even in the event of partial temporary closures or totals. of its chains, and adjust stocks.
Source: La Verdad
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