Italy PMI May 2020


Italy: Deterioration in manufacturing conditions eases on partial reopening in May

June 1, 2020

The IHS Markit manufacturing Purchasing Managers’ Index (PMI) bounced from April’s record-low of 31.1 to 45.4 in May, amid a partial reopening of the economy. However, the index remained below the crucial 50-threshold, indicating worsening conditions in the manufacturing sector, where it has been for over one year.

The softer contraction in the headline PMI came largely on the back of less sharp declines in output and new orders. That said, both contracted for the 22nd consecutive month, with the drop in new orders among the fastest in over 11 years. Moreover, exports continued to fall amid muted demand from European Union countries experiencing similar lockdowns. As a consequence, manufacturers reduced their staff numbers for the 12th consecutive month and at the second-quickest pace since April 2009. On the price front, input costs fell due to lower prices for oil and raw materials; meanwhile, firms cut their output prices in a bid to attract clients. On a somewhat more positive note, businesses sentiment in May inched up from April, on hopes of easing lockdown restrictions globally.

Commenting on the release, Lewis Copper, economist at HIS Markit, stated:

“Although latest figures highlighted a softer rate of deterioration, conditions across the sector remain extremely challenging as firms struggle to revive demand both domestically and abroad. A recovery from such a colossal downturn will inevitably take some time."

FocusEconomics Consensus Forecast panelists see fixed investment diving 14.8% in 2020, which is down 7.3 percentage points from last month’s estimate. For 2021, the panel expects fixed investment to increase 7.2%.

Author: Massimo Bassetti, Economist

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