Spain's factory activity still strong though supply problems persist -PMI

MADRID (Reuters) - Spanish factory activity grew at a fast pace again in September but supply-chain disruptions and raw material scarcity weighed on the sector, a survey showed on Friday.

IHS Markit's Purchasing Managers' Index (PMI) for manufacturing in Spain fell to 58.1 for September, from 59.5 in August. However, the reading was well above the 50.0 mark that indicates an expansion in activity and was not far from June's reading of 60.4, which was the highest in more than two decades.

"Growth is clearly being restrained by severe and ongoing supply-side delays, which show little sign of dissipating," IHS Markit's economist Paul Smith said.

Supply chain disruptions and mismatches between supply and demand for raw materials contributed to input price increases, which in turn encouraged manufacturers to build up inventories and hence produce even more.

Companies reported demand was still strengthening as some clients were making advance orders to protect against delivery delays.

The Spanish statistics department INE downgraded second quarter economic growth to 1.1% earlier this week from an initial 2.8%, raising concern about the recovery's speed.

Spain's economy had shrunk 0.4% in the first quarter after increasing cases of COVID-19 forced renewed curbs on business activity.

The government expects the economy to grow 6.5% this year after 2020's record 10.8% contraction.

(Reporting by Inti Landauro; Editing by Susan Fenton)

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