Italy: Operating conditions more contractionary in June
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) dropped to 48.4 in June from May’s 49.7. The index thus moved further below the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for nine months in a row.
The deterioration came on the back of falling output and new orders, both of which fell for the 11th consecutive month. Moreover, new foreign orders also contracted, and did it at the sharpest pace since August 2012, weighed down by weaker demand from Turkey and middle eastern markets. Consequently, manufacturers reduced staff, and at a robust pace, while reducing backlogs of work again. Input costs, meanwhile, fell for the first time in almost three years, due to lower prices for raw materials. However, firms increased their output prices. Lastly, business confidence dipped but remained in optimistic terrain, supported by a positive outlook on customers numbers and new product investments.
Commenting on the outlook, Amritpal Virdee, an economist at IHS Markit, remarked:
“There is a brightspot, however, in the first decline in input costs since August 2016. If continued, the moderation in cost burdens could create space for more competitive pricing and fuel an up-tick in demand as we move through the second half of 2019.”