Service companies in Spain hired staff at the fastest rate in eight years in July, a survey showed on Wednesday, as a bumper summer tourism season gets underway and the economic recovery strengthens.

New business also picked up, and Markit’s Purchasing Managers’ Index (PMI) of service companies hit 59.7 in July, up from 56.1 in June. That marked the 21st month in a row the index was above the 50 line separating growth from contraction. The employment sub-index rose to 55.3.

Spain’s economic output expanded at the fastest quarterly rate since 2007 in the April-June period.

Record numbers of tourist arrivals in Spain in the first half of 2015 are heightening expectations of busy season for the services sector, which should feed into third-quarter growth.

It is also helping to create jobs at a time when Spanish unemployment is still at 22.4 per cent, among the highest rates in Europe.

“We can therefore expect to see further reductions in the unemployment rate in coming months, with this hopefully feeding through into improving demand,” said Andrew Harker, senior economist at Markit, pointing to the quickening pace of hiring in the manufacturing sector, too.

Services companies increased their prices for the second month in a row, Markit said, as their own costs increased, including staff expenses and especially in the hotel and restaurant sector.

Reuters