Spain's service industry saw its fastest growth in February since May 2023, with optimism about the future reaching a two-year high, according to a survey released on Tuesday.

The HCOB Spain Services Purchasing Managers' Index, or PMI, compiled by S&P Global, surged from 52.1 in January to 54.7.

The indicator has consistently remained above 50, representing growth rather than contraction, every month since November 2022, with the exception of last August.

The HCOB Spain Services PMI is created through feedback collected from surveys distributed to approximately 350 service-sector companies, encompassing areas including transport, information, consumer (except retail), communication, finance, insurance, real estate, and business services.

Commenting on the PMI data in a news release from S&P Global, Jonas Feldhusen, junior economist at Hamburg Commercial Bank, said: "Spain keeps building on the growth path. The HCOB PMI for the services sector has experienced an upward surge compared to the previous month. Analogous to the improvements in the manufacturing sector, the momentum in services also stems from increased domestic demand."

It appears Spain is currently undergoing a "demand-driven upswing", he said, noting that while this underscored the country's resilience, "impulses from abroad remain restrained".

The increase in activity observed last month corresponded with a surge in new business, the survey indicated. The majority of that growth stemmed from domestic sources, as new export business declined for the seventh consecutive month in February due to reports of political and economic uncertainty affecting foreign sales, said S&P Global.

Despite Spain's economy outperforming its eurozone counterparts with a 2.5 percent expansion in 2023, the Spanish government anticipates a slowdown to 2 percent growth this year.

Feldhusen said: "We expect sticky inflation in Spain to persist in 2024. Spain's service providers are optimistic for the future. Respondents expressed optimistic forecasts for demand, accompanied by expectations of reduced inflation and the realization of new projects in 2024."

Spain is anticipated to emerge as the top-performing major economy in the eurozone next year according to revised growth projections, with the Organisation for Economic Cooperation and Development, or OECD, forecasting a 1.5 percent expansion in 2024 and a further 2 percent in 2025, building on the growth witnessed last year. Additionally, Spain stands out as the sole nation in the eurozone to have its growth forecast upgraded by the OECD.

In comparison, projections indicate modest growth for the eurozone as a whole, at 0.6 percent in 2024 and 1.3 percent in 2025, with Germany's economy expected to grow by only 0.3 percent this year. France has forecasted growth of 0.6 percent.

Recent official data revealed that the United Kingdom is currently experiencing a recession, as reported by the Office for National Statistics, with the economy contracting by 0.3 percent from October to December last year following a prior decline between July and September.