Key findings:
- Renewed drop in production amid further fall in new orders
- Inflationary pressures dissipate
- Job shedding continues as business confidence wanes
Comment:
Commenting on the PMI data, Nils Müller, Junior Economist at Hamburg Commercial Bank, said:
“Italy’s manufacturing sector lost ground in June, with the headline PMI falling to 48.4, marking the sharpest deterioration in
operating conditions since March. After a brief recovery in May, output contracted once more, dragged down by a solid
decline in new orders. Both domestic and foreign demand remained subdued, with firms citing persistent difficulties in
securing new clients and waning appetite in key export markets.
“The downturn was broad-based across the PMI components. New orders fell at the fastest pace in three months, prompting
firms to scale back production and purchasing activity. Employment continued to decline, though at a slower rate, largely
due to non-replacement of voluntary leavers and reduced reliance on temporary staff. Stocks of purchases were drawn
down at the quickest pace since March, while supplier delivery times lengthened amid logistical bottlenecks – an unwelcome
development given softer input demand.
“Encouragingly, inflationary pressures continued to ease. Input costs fell for a second consecutive month, helped by lower
raw material prices and supplier discounts. Output charges also declined fractionally, as firms sought to remain competitive
in a weak demand environment. This disinflationary trend aligns with broader eurozone dynamics and may offer some relief
to policymakers at the ECB.
“Yet, the outlook remains clouded. While firms remain broadly optimistic about future output – supported by hopes of
stronger demand and planned investment – confidence slipped to its lowest since last November. This softening in
sentiment reflects fragile customer demand and a challenging external environment as trade uncertainty stemming from U.S.
policy shifts continues to weigh on the global outlook. However, the easing of geopolitical tensions, particularly in the Middle
East, could raise the prospect for sustained lower energy prices. But for now, Italy’s manufacturers remain in a defensive
posture, navigating a recovery that remains elusive.”
Italy Manufacturing PMI
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