Italy: Manufacturing conditions improve at fastest pace in over two years on easing lockdown in July
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) rose from 47.5 in June to 51.9 in July, as demand conditions improved amid easing lockdown measures. The result marked the strongest reading since June 2018. Therefore, the index moved above the crucial 50-threshold, indicating improving conditions in the manufacturing sector, where it had been for over one year.
The expansion in the headline PMI came largely on the back of the strongest increase in production since March 2018 and thanks to the first increase in new orders in two years. That said, exports continued to fall, albeit mildly, suggesting lockdowns abroad continued to restrain demand. Moreover, manufacturers reduced their staff numbers for the 14th consecutive month and at a sustained pace. On the price front, input costs rose for the first time since January although firms kept cutting their output prices in a bid to attract clients. Lastly, businesses remained optimistic in July, on rising hopes of economic recovery.
Commenting on the release, Lewis Copper, economist at HIS Markit, stated:
“Overall, July data appear to suggest the sector is on its way to recovery, with output expectations also remaining positive. But, after such an extreme blow, there is masses of ground to make up. It is essential that demand conditions continue to improve, and any reintroduction of lockdown measures due to a “second wave” of the pandemic has the potential to derail the recovery.”