Italy: October PMI spells trouble for manufacturing activity in the final stretch of the year
November 4, 2019
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) dipped to 47.7 in October from 47.8 in September. The index thus moved further below the crucial 50-threshold that separates expansion from contraction in the manufacturing sector, where it has been for over one year.
The deterioration in the headline PMI came mainly on the back of a sharper decline in output. Output fell for the 15th month in a row, and did it at the fastest pace since January, as both domestic and external demand faltered. New orders—including new exports orders—also continued to decrease, although the pace of contraction eased compared to September. Weakening demand conditions were observed especially in the automotive sector. Consequently, manufacturers reduced staff at a sustained pace overall, and backlogs of work declined for the 19th consecutive month. Meanwhile, input costs declined due to lower prices for raw materials; however, firms raised their output prices, in a bid to rebuild profit margins. Lastly, business confidence fell to a 10-month low but remained in optimistic terrain.
Commenting on the outlook, Amritpal Virdee, an economist at IHS Markit, remarked:
“With latest official data signalling a further decline of Italian manufacturing production, the recent downturn does not appear to be ending anytime soon”.