Italy: Operating conditions firmly in contractionary terrain in August
September 2, 2019
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) edged up to 48.7 in August from 48.5 in July. The index thus remained entrenched below the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for 11 months in a row.
The marginal improvement in the headline PMI came mainly on the back of a softer decline in output. That said, both output and new orders fell for the thirteenth month in a row, as both domestic and external demand faltered. New export orders were especially weighed down by contracting demand from Germany. Consequently, manufacturers reduced staff, although at a marginal pace overall, while backlogs of work declined again. Meanwhile, input costs increased after two months of reduction, due to rising prices for raw materials and higher input costs. Consequently, firms raised their output prices, albeit slightly. Lastly, business confidence continued to dip but remained in optimistic terrain, supported by a positive outlook on customer numbers and investments in new products.
Commenting on the outlook, Amritpal Virdee, an economist at IHS Markit, remarked:
“Whilst the downturn in part reflects a challenging global economic environment, especially in key export markets such as Germany, the eleventh successive monthly deterioration in manufacturing conditions is also symptomatic of the need for broader structural changes.”