Italy: Manufacturing sector again loses steam but continues to expand in April
May 2, 2018
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) came in at 53.5 in April, below March’s 55.1 and the lowest reading since January 2017. The index nevertheless remained above the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for 20 consecutive months.
April’s result came on the back of softening expansions in output and new orders. Growth in output and new orders was restrained by weaker domestic demand, while export sales continued to increase healthily. Backlogs of work decreased for the first time in a year, despite sustained pressure on manufacturing capacity, as companies continued to hire more staff—a trend that has been ongoing for the last three years. In terms of price developments, input costs rose again due to growing capacity bottlenecks, which translated into rising output prices. Lastly, optimism towards future production remained strong despite declining from the previous month, fueled by positive projections for sales and planned new product launches.
Paul Smith, Director at IHS Markit, commented:
“A third successive monthly fall in the headline PMI represents a clear turning point in growth since the start of the year and cannot simply be attributed to Q1’s weather-related disruptions. On the contrary, anecdotal evidence in recent months has pointed to global supply-side constraints as a factor limiting growth, and these issues in April were exacerbated by increased weakness in domestic market conditions.”
Italy Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment growing 2.5% in 2018, which is unchanged from last month’s estimate. For 2019, the panel expects fixed investment to increase 2.1%.