- Manufacturing PMI 49.4 vs. 48.5 expected and 47.4 prior.
Key findings:
- Declines in production and new orders only modest in August.
- Firms raise staffing levels for first time since April as outlook brightens.
- Charge inflation returns after nearly a year-and-a-half of reductions.
Comment:
Commenting on the PMI data, Dr Tariq Kamal Chaudhry Economist at Hamburg Commercial Bank, said:
“Italy's industry is on the mend. Although the HCOB PMI for Italy's manufacturing sector remains below the growth threshold at 49.4 points in August, the index has gained two points. Still, this result is good news given the downward trend elsewhere in the eurozone in recent months. However, the situation for the Italian manufacturing industry is far from ideal.
Companies surveyed reported scaling back production due to sluggish new order intakes and generally weak market conditions. Price developments continue to trouble Italy's industrial sector. Despite a slight dip in August, the latest rise in input costs was nevertheless strong. Companies surveyed attributed the persistent price pressure to higher raw material costs. On a slightly positive note, output prices have also started to climb, allowing firms to pass on some of their increased expenses to customers.
However, the wide gap between input and output prices, particularly since the start of the second quarter, underscores the ongoing strain on profit margins. The outlook by the panellists may be overly optimistic. Businesses are looking ahead with greater confidence, reflected in increased hiring in August, following cuts in the previous three months despite the persistent labour shortage in Italy.
Future output expectations are almost euphoric when compared to the historical average, but this optimism seems more rooted in hope. A closer look at total and international order intakes reveal that, despite a noticeable jump from the previous month, orders continued to decline. We need more evidence of a sustained upward trend.”
