Italy: Manufacturing sector starts year on a strong note
February 1, 2018
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) came in at an almost seven-year high of 59.0 in January, above December’s 57.4. The index thus moved further above the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for 17 consecutive months.
January’s result came on the back of robust expansions in output, new orders and exports. Growth in new orders rose at one of the fastest paces in almost 18 years, buttressed by stronger domestic and export demand. Demand from European trading partners and the U.S. was particularly strong. This led to the strongest expansion in production in almost seven years 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 and higher prices for raw materials, input costs rose sharply. This was reflected in output prices rising at the strongest pace in seven years. Lastly, optimism towards future production remained elevated.
Paul Smith, Director at IHS Markit, commented:
“Italy’s manufacturing sector delivered a barnstorming performance during January […]. Bulging order books in recent months have primarily reflected strong international demand for high-end Italian manufactures, but January data pointed to a growing contribution from within Italy itself.”
Italy 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%.