Italy: Manufacturing sector closes year on a high note
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) came in at a strong 57.4 in December, below November’s multi-year high of 58.3. The index thus remained well above crucial the 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for 16 consecutive months.
December’s result came on the back of robust expansions in output, new orders and exports. Growth in new orders came in at a solid rate, although somewhat slower than in the previous month, mainly buttressed by rising levels of export demand. Demand from European trading partners was particularly strong. This led to a strong expansion in production and prompted businesses to expand their workforces markedly. However, backlogs of work continued to increase at a solid pace, signaling growing pressure on manufacturing capacity. In terms of price developments, due to rising capacity pressures, input costs rose sharply, especially for metals, which was reflected in output prices rising markedly. Lastly, optimism towards future production remained elevated.
Paul Smith, Director at IHS Markit, commented:
“With strong demand from abroad – and widespread expectations amongst manufacturers that this will continue in the months ahead – the sector has momentum and is well placed to enjoy a strong start to 2018. Although the pipeline of new orders remains extremely positive, there are downside risks to sector expansion coming from the supply side. Vendors are struggling to keep up with surging demand, are running low on stocks and having to raise list prices, all factors that could place constraints on manufacturing growth in the months ahead”