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Italy PMI August 2023

Italy: Manufacturing PMI recovers further ground in August

The HCOB Manufacturing Purchasing Managers’ Index (PMI) rose to 45.4 in August from July’s 44.5. Consequently, the index remained entrenched below the 50.0 no-change threshold, signaling a deterioration in business conditions in the manufacturing sector compared to the previous month.

August’s result was driven by softer albeit historically marked contractions in output and new orders, hit by adverse weather conditions, declining confidence, recession worries and client destocking. Moreover, firms scaled back purchasing activity at a notable pace amid protracted destocking. Meanwhile, employment was cut for the first time since August 2020, signaling that the downturn in the manufacturing sector is starting to spill over into the labor market. That said, supply constraints eased further, which led input prices to fall sharply and businesses to reduce output prices again. Lastly, manufacturers grew more optimistic outlook for future activity, on hopes of recovering demand and consumption.

Commenting on the release, Dr Tariq Kamal Chaudhry Economist at Hamburg Commercial Bank, said:

“The manufacturing recession, which started mid-last year continues to stretch out, extending most likely into the third quarter. […] It remains remarkable how sanguine producers are about the future, with confidence about prospective output again above its long-term average. Companies are pinning their hopes on a resurgence in goods demand in the upcoming year.”

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