Italy: Manufacturing sector loses some steam but continues to expand healthily in March
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) came in at 55.1 in March, below February’s 56.8 and the lowest reading in eight months. The index nevertheless remained comfortably above the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for 19 consecutive months.
March’s result came on the back of softening expansions in output and new orders. Growth in output and new orders nonetheless remained robust, supported by healthy demand. Backlogs of work continued to increase for the eleventh consecutive month, signaling sustained pressure on manufacturing capacity. This prompted businesses to expand their workforces markedly, continuing a trend that has been going on for the last three years. In terms of price developments, due to growing capacity constraints, input costs rose notably. This was reflected in rising output prices, although the pace of increase moderated compared to February. Lastly, optimism towards future production remained strong but declined from the previous month.
Paul Smith, Director at IHS Markit, commented:
“Italy’s manufacturing sector continued to lose growth momentum as the first quarter of the year drew to a close, but still continues to expand strongly in line with positive market conditions. If anything the slowdown in growth seems to primarily reflect supply-side problems, with manufacturers bemoaning the difficulties in sourcing inputs from vendors. With stock levels already being run low, these developments have acted as a brake on growth.”