Spanish companies are upbeat about economic recovery Spanish companies are becoming more bullish over the pace of economic recovery, with a poll of managers in the services industry showing the sharpest pick-up in activity and new orders in more than six years. The Markit index for business activity in Spain's services sector rose from 51.5 in November to 54.2 last month, the biggest leap since July 2007. December was the fifth successive month in which the services industry reported an increase in business, suggesting that recovery is spreading from the export industry and manufacturing to more domestically focused businesses. "What we are seeing here is some lift in consumer and household spending, but also that companies are now more comfortable about taking on new staff, bringing out new products and spending more on things such as advertising," said Chris Williamson, Markit's chief economist. He added that Spain's economic recovery was driven by growth in export markets such as Germany and by Madrid's recent efforts to hold down wages and bolster competitiveness. Unit labour costs have come down sharply and this is feeding through into all economic sectors. It bodes well for the coming years," Mr Williamson added. Antonio García Pascual, chief euro area economist at Barclays, said the latest data were encouraging but saw no need to lift his growth prediction for this year, which foresees a rise in output of about 1 per cent. "A stronger recovery can only happen if there is a strong rebound in investment and employment but you don't see that because credit is weak and leverage is still high," he said, adding that Spain was likely to see only a "mild recovery." The economy returned to growth in the third quarter last year, ending more than two years of harsh recession. Most economists believe the acute phase of Spain's financial crisis has passed, but argue that the economic debris created by the bursting of the housing bubble will linger for many years to come. Government debt is close to 100 per cent of gross domestic product, while unemployment remains stuck at more than 25 per cent of the workforce, one of the highest jobless rates in the western world. The government of Mariano Rajoy believes national output will grow by 0.7 per cent this year, but some ministers have suggested recently that the recovery could be more pronounced than anticipated. Madrid's newfound confidence was further bolstered on Friday, when official data showed the sharpest drop in registered unemployment ever recorded in December. Speaking last week, Luis de Guindos, the economy minister, said he expected stronger job creation this year than previously forecast by the government. "2014 will see net creation of jobs, higher even than we predicted in September in the budget, and the jobless rate will fall," he told Spanish radio. The sharp bounce in the Spanish services PMI revealed on Monday mirrored a broader improvement in business activity across the eurozone. Markit's composite purchasing managers" index rose from 51.7 in November to 52.1 last month, while the euro-wide index for the services sector dipped slightly but remained above 50, the threshold that implies expansion.