Italy: Manufacturing sector booms at the start of Q4
November 2, 2017
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) came in at a multi-year high of 57.8 in October, above September’s 56.3 reading. The index thus moved further above the 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for 14 consecutive months.
October’s increase was again fueled by expansions in both output and new orders. New orders grew at the fastest pace in six-and-a-half years mainly on the back of rising levels of export orders, especially from Germany. This led production to expand strongly and backlogs of work to grow for the sixth consecutive month and prompted businesses to expand their workforces at the strongest pace in over 20 years. Moreover, expectations of output over the coming months remained positive thanks to a supportive demand environment. In terms of price developments, due to widespread shortages of raw materials the rate of input price inflation accelerated further, which was reflected in output prices rising sharply.
Paul Smith, Director at IHS Markit, commented:
“Italy’s manufacturing sector boomed at the start of the final quarter of 2017 […] Anecdotal evidence implied that underlying demand from domestic sources remains relatively muted, so growth is being underpinned by sharply rising exports.”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%.