Spanish services sector activity grew in March at the fastest pace since last May as an acceleration in new business stretched capacity and made companies hire more staff, a survey showed on Thursday.

The HCOB Spain Services Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 56.1 from 54.7 in February. It was the index's seventh straight month above the 50.0 line denoting growth in activity, where it has been every month since November 2022 except for last August.

"It is getting better on all fronts," said Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, citing also the recent growth in new export business after a contraction since last summer, which is mostly driven by tourism in Spain.

"Overall, Spain is setting the stage for another year of above-average growth compared to most other euro zone countries."

A sister survey showed on Tuesday manufacturing activity in Spain expanded in March for the second month in a row, defying a wider euro area decline, with output growth at its strongest in a year.

Even though average operating expenses increased sharply again in March, and panellists reported that higher salary costs were a key driver for that, confidence in the future remained strong, buoyed by hopes of sustained sales upturns, the services sector survey showed.

Spain's economy expanded by 2.5% in 2023, outperforming its euro zone peers. The government expects economic growth to slow to a still solid 2% this year. (Reporting by Andrei Khalip, editing by Hugh Lawson)