Italy PMI October 2020


Italy: Manufacturing conditions improve at fastest pace in over two-and-a-half years in October

November 2, 2020

The IHS Markit manufacturing Purchasing Managers’ Index (PMI) rose from 53.2 in September to 53.8 in October. The result marked the strongest reading since March 2018. Therefore, the index moved further above the crucial 50-threshold, indicating improving conditions in the manufacturing sector.

The expansion in the headline PMI came on the back of faster increases in production and new orders. Exports orders rose at the fastest pace in nearly three years, amid recovering foreign demand, and domestic demand also improved. Meanwhile, companies continued to hire more staff, although the pace of job creation was only fractional. On the price front, input costs rose at the quickest pace since November 2018 amid higher raw material prices and supply chain disruptions. However, firms lowered their output prices in a bid to stimulate demand. Lastly, business sentiment moderated but remained strongly positive, thanks to improved hopes of economic recovery.

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

“All in all, the data provide some further, well needed, positivity, and suggest that the worst of the economic downturn in the goods producing sector is well behind us. But, with COVID-19 cases on the rise and new restrictions being introduced, the recovery has the potential to stall if factories are unable to operate, or if client demand falls considerably as it did in the spring."

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, Senior Economist

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Italy PMI Chart

Italy PMI October 20 20

Note: IHS Markit Purchasing Managers’ Index. Readings above 50 indicate an overall increase compared to the previous month, and below 50 an overall decrease.
Source: IHS Markit.

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