A worker walks between tanks filled with olive oil at the Spanish olive oil producer Dcoop's factory in Antequera, Spain, April 9, 2025. REUTERS/Jon Nazca

MADRID (Reuters) -Spain's manufacturing sector experienced its fastest growth in nearly a year in August, driven by a sharp rise in output and new orders, S&P Global reported on Monday.

The HCOB Spain Manufacturing Purchasing Managers' Index (PMI) rose to 54.3 in August, up from 51.9 in July, marking the fastest expansion since last October, when it stood at 54.5. A PMI reading above 50 indicates growth in activity.

The uptick in the PMI was supported by marked improvements in both output and new orders, with domestic demand as the primary driver and to a lesser extent export orders.

"The positive developments on the demand side appear to be spilling over into other subcomponents; manufacturers are expanding their workforce to keep pace with rising workloads, while stocks of finished goods continue to decline due to stronger sales," Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said.

"The country’s sustained strength could act as a catalyst for broader economic revitalization across the currency union," he added.

Employment in the sector increased for the sixth consecutive month and confidence in the outlook strengthened.

The Spanish economy has outpaced other large economies in the euro zone, with 0.7% growth in the second quarter, statistics department INE said in July.

The Spanish government expects 2.6% growth this year.

(Reporting by Inti Landauro; Editing by Toby Chopra)