According to the data revealed by the Markit's Purchasing Manager's Index, the rate of the downturn in Spanish manufacturing area eased to its slowest rate since January 2008 in Feb 2010 as exports helped increase new orders.

The country's financial system was fighting with recession during the last quarter of 2009 as many of its European neighbours' economic systems returned to growth.

While talking to reporters, Markit economist Andrew Harker said, "Although the manufacturing sector neared stabilisation in February, PMI data suggest that domestic demand in particular remains weak, with panelists reporting a lack of confidence among clients."

Around 3.8 point increase in the headline index will provide some comfort to the national economy, which hopes the economy to grow again in 2010 lifted by contraction.

Meanwhile, EU Commission anticipated that Spanish economy would fell by 0.6% over the course of 2010 from its last prediction of 0.8% contraction.

Further, Harker said, "The rise in new export orders was a more positive note, and indicates that the substantial cuts in charges seen over the past year may be starting to make Spanish firms more competitive globally."

"However, the severity of the discounts that manufacturers are having to offer will surely prove unsustainable as rising input prices continue to erode profit margins" Harker added.