Italy: PMI rebounds in February
March 23, 2017
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) rose from 53.0 in January to 55.0 in February and marked the highest reading in over one year. The index thus moved further above the 50-threshold that separates expansion from contraction in the manufacturing sector.
February’s result mainly reflected faster growth in output and new orders, which expanded at the fastest rate since the last month of 2015. Growth in new orders was a particularly important factor in the overall improvement of the index. This translated into higher backlogs of work and the stronger rate of job creation since late 2000s. In addition, manufacturers’ confidence towards the outlook for activity in the year-ahead increased from January and reached a six-month high. Regarding price developments, input prices increased at the strongest rate in over five-and-a-half years, mainly on the back of higher prices for raw materials, and led to another rise in output charges.
Phil Smith, Economist at IHS Markit, added that, “Italian manufacturers’ positive start to 2017 continued into February […]. However, the upturn is under threat from sharply rising purchasing costs, which are being partially passed on at the factory gate and could lead to less liberal hiring policies and also lower demand from price sensitive customers.”