MADRID, June 1 (Reuters) - Spain's manufacturing sector expanded modestly in May, at a slightly slower pace than in April, as disruptions linked to the Middle East conflict worsened supply delays, raised
costs and weighed on demand, a business survey showed on Monday.
In the survey by S&P Global, the country's Manufacturing Purchasing Managers' Index (PMI) fell to 51.2 in May from 51.7 in April. The 50-mark separates growth from contraction.
"May indicated a partial reversal of last month's safety stock-driven manufacturing sector growth," said Paul Smith, Economics Director at S&P Global Market Intelligence.
"This was linked to the dual forces of elevated prices and ongoing uncertainty, which were seen by manufacturers as negatively impacting client budgets and resulting in a drop in their sales over the month," Smith added.
Output rose for a second month, but only marginally and at a weaker pace than in April. Respondents linked the slowdown to weaker incoming demand after new orders fell for the fifth time in six months.
Export demand also remained under pressure. New export orders declined for a ninth straight month, although the rate of contraction was the weakest since February.
The pace of job cuts was marginal and the weakest since February.
Supply strains intensified sharply. Vendor performance deteriorated to the greatest extent in four years, while input price inflation hit a four-year high.
Confidence improved to a three-month high from March's near two-and-a-half-year low, but remained below its historical average as firms cited geopolitical uncertainty, weak demand and the risk of further price rises.
The government expects the Spanish economy, which is among the top performers in Europe, to expand 2.2% this year after 2.8% in 2025, although it has acknowledged that the war in the Middle East could weigh on the forecast.
(Reporting by David Latona; Editing by Andrei Khalip and Toby Chopra)
