Italy: Manufacturing downturn softens on a further relaxation of restrictions in June
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) rose from 45.4 in May to 47.5 in June, amid further easing of containment measures. 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 the first increase in production since July 2018 and thanks to a milder decline in new orders. That said, new orders contracted for the 23rd consecutive month, as companies struggled to stimulate client demand. Moreover, exports continued to fall markedly, suggesting lockdowns abroad are hammering demand. As a consequence, manufacturers reduced their staff numbers for the 13th consecutive month and at a marked pace. On the price front, input costs fell again and firms kept cutting their output prices in a bid to attract clients. On a more positive note, businesses sentiment hit the highest level in nearly five years in June, on rising hopes of economic recovery.
Commenting on the release, Lewis Copper, economist at HIS Markit, stated:
“Although the improvement in firms’ confidence is a step in the right direction and the downturn has eased, the Italian manufacturing sector is still facing a rocky path to recovery as demand needs to improve considerably for growth to return in a meaningful manner.”