Italy: Sharper deterioration in manufacturing conditions in September
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) fell to 47.8 in September from 48.7 in August. The index thus moved further below the crucial 50-threshold that separates expansion from contraction in the manufacturing sector, where it has been for a whole year.
The deterioration in the headline PMI came mainly on the back of sharper declines in output and new orders. Both output and new orders fell for the 14th month in a row, as both domestic and external demand faltered. New export orders were especially weighed down by contracting demand from Europe and the U.S. Consequently, manufacturers reduced staff, although at a moderate pace overall, while backlogs of work declined for the 18th consecutive month. Meanwhile, input costs decreased due to lower prices for raw materials. Consequently, firms cut their output prices, in a bid to stimulate customer demand. Lastly, business confidence fell to a nine-month low but remained in optimistic terrain, weighed down by worries over the automotive sector.
Commenting on the outlook, Amritpal Virdee, an economist at IHS Markit, remarked:
“Italy’s manufacturing sector showed no sign of turning the corner in September […]. A number of factors continued to undermine demand, particularly a very weak export climate, predominately affecting the capital goods sector. […] As such, latest PMI data suggest that the manufacturing economy is limping towards the final quarter of the year and, on its current trajectory, will end up smaller than when it entered the downturn in early-2018”