Italy: Manufacturing sector weakens somewhat in February
March 1, 2018
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) came in at 56.8 in February, below January’s seven-year high of 59.0. The index thus remained comfortably above the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for 18 consecutive months.
February’s result came on the back of robust but softening expansions in output, new orders and exports. Growth in output and new orders rose at the slowest pace since September, supported by healthy domestic and export demand. Demand from outside of the EU was signaled to be particularly solid. Backlogs of work increased at the sharpest pace in over 15 years, signaling growing pressure on manufacturing capacity. This prompted businesses to expand their workforces markedly. In terms of price developments, due to growing capacity constraints and higher prices for metals, input costs rose sharply. This was reflected in output prices rising at the strongest pace in almost seven years. However, optimism towards future production touched its highest level in almost a year, as firms expect the economic situation to be positive.
Paul Smith, Director at IHS Markit, commented:
“Overall growth of the sector was primarily restrained by increasingly acute supply-side factors as the rapid gains in demand over recent months weighed heavily on vendors and a further lengthening of lead times. This had a knock-on effect of leading to delays in production and associated difficulties amongst manufacturers in servicing their order books.”
Italy Fixed 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%.