Spanish business activity recovers in Q2, Iran war raises costs

The Bank of Spain's Business Activity Survey (EBAE) for Q2 2026 indicates a recovery in Spanish business activity.

Turnover registered an increase, even after seasonal adjustments, contrasting with a slightly less favorable PMI composite signal and reversing a slight dip in Q1. Most sectors reported positive performance, consistent with a year prior.

Employment also saw an increase, though the seasonally adjusted series showed a slight decrease.

Investment decisions rebounded, particularly in the industrial sector, following a Q1 decline.

Expectations for Q3 suggest continued growth in both turnover and employment, with investment dynamics also expected to persist.

While most firms reported no changes in demand due to the Iran conflict (69 percent international, 62 percent national), a significant 56 percent indicated that increased uncertainty from the conflict is influencing their investment decisions.

The Iran war is impacting firms' purchase and selling prices, primarily due to higher energy costs.

The survey indicates a notable rebound in intermediate consumption cost pressures, particularly in energy-intensive sectors, surpassing Q2 2025 levels.

Selling price increases are more moderate, though higher than a year ago.

Energy cost increases directly affect activity, with 63 percent of firms reporting negative impacts.

Supply chain issues are also significant, affecting over 50 percent of firms for both energy and non-energy inputs.

Political uncertainty is a growing concern for 62 percent of firms.

Labor availability difficulties have slightly eased to 43.3 percent.

While financial constraints remain low, interest payment costs are rising, affecting 24.3 percent of firms.