Spanish services growth kept up strong pace in August: PMI

MADRID (Reuters) - Activity in Spain's service sector expanded for the fifth month in a row in August, though at a slower pace than in the previous months, as more COVID-19 travel restritions were phased out, a survey indicated on Friday.

IHS Markit's Purchasing Managers' Index (PMI) of services companies, which account for around half Spain's economic output, slipped to 60.1 last month, down from 61.9 in July and 62.5 in June. The 50 mark separates growth from contraction.

"The current strong growth phase in the Spanish service sector was sustained during August as the economy continues to benefit from a loosening of lockdown restrictions and successful vaccine rollout," Andrew Harker, Economics Director at IHS Markit, said.

The end of most restrictions in Spain, and in other European countries where quarantines had been imposed on tourists returning home, has allowed Spain's tourist sector to take off in the past few months.

As a result companies hired more people and took employees off furlough, he added.

Government data on Thursday showed unemployment had the biggest August decline ever recorded as the tourism industry partly recovered.

The rate of input cost inflation, most notably energy prices and rising wages, remained a concern for businesspeople in August, IHS said.

Rising vaccination rates and looser COVID-19 restrictions caused Spain's economy to expand by a better-than-expected 2.8% in the second quarter. The government expects 6.5% growth this year after 2020's record 10.8% contraction.

(Reporting by Inti Landauro; Editing by Toby Chopra)