Italy: Manufacturing sector remains in poor shape in February
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) dipped to 47.7 in February from January’s 47.8, marking the worst reading in close to six years. The index therefore moved further below the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for five months in a row.
The deterioration in operating conditions came on the back of falling production and plunging new orders, both of which recorded the seventh consecutive month of contraction. New orders contracted at the sharpest pace since May 2013 on the back of plummeting domestic demand, which translated into another month of contraction in output. Nevertheless, foreign orders recovered from the previous month, powered by greater demand from the UK and Germany. Moreover, manufacturers hired more staff, although at an unremarkable pace, while inventories of finished goods declined further. Input inflation, meanwhile intensified, fueled by higher prices for raw materials, leading firms to increase output prices. Lastly, business confidence improved, motivated by somewhat rosier expectations on new product launches and overall demand conditions.