Italy PMI January 2020

Italy

Italy: Manufacturing conditions show signs of stabilization at start of year

February 3, 2020

The IHS Markit manufacturing Purchasing Managers’ Index (PMI) jumped to an eight-month high of 48.9 in January from December’s over six-year low of 46.2. The index thus moved closer to but remained below the crucial 50-threshold, indicating worsening conditions in the manufacturing sector, where it has been for over one year.

The improvement in the headline PMI came mainly on the back of softer declines in output, new orders and employment. That said, domestic and external demand remained puny, with the latter suffering from weakness in the global automotive market. As a consequence, manufacturers reduced their staff numbers amid declining backlogs of work, although the rate of job cuts was only marginal. On the price front, input costs stabilized following four months of declines amid higher raw material costs, while firms raised their output prices. Lastly, business confidence hit a 20-month high thanks to the launch of new products and expected improvements in new export orders.

FocusEconomics Consensus Forecast panelists see fixed investment growing 0.9% in 2020, which is unchanged from last month’s estimate. For 2021, the panel expects fixed investment to increase 1.0%.


Author: Massimo Bassetti, Economist

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