Spain’s manufacturing activity grew for the fifth straight month in July, although at a slower pace than June, on softer demand, according to the findings of a survey published on Thursday.

The HCOB Purchasing Managers' Index (PMI) for the country’s manufacturing sector, compiled by S&P Global, was 51 in July, a fall from June’s reading of 52.3 and 54 in May.

However, it was the sixth consecutive reading above the 50-mark that divides growth from contraction, Reuters reports.

The growth was the slowest since February, as new incoming orders declined for the first time since January, according to S&P. For the fifth consecutive month, panellists reported that market conditions had worsened.

“The wind in Spain's manufacturing sector appears to be shifting – headwinds are picking up. Similar to the Flash PMI of the Eurozone, the trend in Spain's manufacturing sector is also deteriorating. Although the index still indicates marginal growth with 51.0 points, the trend has clearly been moving towards stagnation since May,” according to Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, in the S&P report.

“Overall demand saw a slight decline in July for the first time this year, and foreign demand is also losing some momentum. This trend is weighing on purchasing activity, which is declining for the first time since January. Companies are now focusing on utilising existing resources in production and slightly reducing their inventory of purchases,” he added.

Indeed, cost pressures continued to challenge businesses during the month. 

This slowdown occurred despite Spain’s statistics department reporting on Tuesday that the economy grew by a faster-than-expected 0.8% in the second quarter.

Furthermore, the Spanish government forecasts 2.4% GDP growth this year, while the central bank projects a growth rate of 2.3%. This growth is expected to outpace the forecasts for other major eurozone economies, such as France, Germany, and Italy.