MADRID (Reuters – Spain’s factory activity picked up in May, according to a survey. However, rising production costs as well as geopolitical uncertainty have strained business sentiment.

S&P Global (NYSE:)’s Purchasing Managers’ Index (PMI) for manufacturing stood at 53.8 in May, up from 53.3 in April and 54.2 in March and still comfortably above the 50.0 mark that separates expansion from contraction.

“Price pressures remained considerable, whilst expectations for output were somewhat muted by concerns over inflation and geopolitical uncertainty,” S&P Global said in a report.

“Panellists reported little choice but to pass on their own escalating costs through a rise in factory gate prices, but this was having a detrimental impact on sales,” S&P Global’s economist Paul Smith said in the report.

Nadia Calvino has lowered her forecast for economic growth this year due to rising inflation and the uncertainty that comes with the Ukraine war. She had previously projected 7% growth, but it was lowered to 4.3% after experiencing a 5.1% growth in 2021.

The central bank of Spain has reduced the growth expectations for this year to around 4.4%