Italy PMI July 2017


Italy: PMI virtually unchanged at a solid level in July

August 1, 2017

The IHS Markit manufacturing Purchasing Managers’ Index (PMI) dipped marginally to 55.1 in July from 55.2 in June. The index thus remained firmly above the 50-point threshold that separates expansion from contraction in the manufacturing sector.

July’s result mainly reflected strong growth in new orders and output. Factory production expanded robustly, although at a somewhat slower pace than in June, while new orders grew for the eleventh consecutive month, with the pace of growth accelerating compared to June. Growth in new export orders eased slightly but remained solid overall, thanks to robust external demand—especially from Germany and the United States. This translated into further job creation, albeit at the slowest pace so far in 2017 due to weaker business confidence towards growth prospects in the year ahead. Regarding price developments, inflationary pressures eased further, as growth in input prices was slower than in the prior month, which led to only a modest rise in output prices.

Phil Smith, Economist at IHS Markit, added that, “The manufacturing sector made a bright start to the second half of the year, continuing its recent spell of solid growth with substantial gains in output, new orders and exports. The immediate prospects for the sector look secure, with growing backlogs pointing to capacity pressures and scope for further expansions in output and employment. However, manufacturers’ production expectations for 12 months ahead have waned, to the lowest in over two-and-a-half years, which raises some concerns about just how long growth can be sustained at the current high level.”

FocusEconomics Consensus Forecast panelists see fixed investment growing 1.4% in 2017, which is unchanged from last month’s estimate. For 2018, the panel expects fixed investment to increase 1.9%.

Author: Massimo Bassetti, Economist

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