- Services PMI 51.4 vs. 52.6 expected and 51.7 prior.
- Composite PMI 50.8 vs. 50.3 prior.
Key findings:
- Fresh decreases in both total and international sales.
- Softest rise in business activity seen since January.
- Optimism in the outlook dips to ten-month low.
Comment:
Commenting on the final PMI data, Dr Tariq Kamal Chaudhry, Economist at Hamburg Commercial Bank, said:
“Italy’s services sector remains the driving force of the economy. However, it is becoming increasingly clear that the economic workhorse is losing momentum and vitality. Since the start of the second quarter, there has been a noticeable slowdown in growth, even though the services sector still signalled expansion in August, with the headline HCOB PMI at 51.4.
High prices accompany a growing sector. Input costs for Italian service providers continued to rise rapidly, with companies reporting higher expenses for labour and supporting services. On the upside, input cost inflation slowed notably compared to the previous month, reaching its lowest level in 40 months. In contrast, prices charged to end customers are rising at a much slower pace, highlighting the challenges companies face in passing on these increased costs to customers.
The outlook for Italy's services sector is not really giving hope. Both total and international order volumes have declined compared to the previous month, and backlogs have also diminished, raising concerns about future momentum. While growth is still expected for the coming twelve months, the degree of optimism falls significantly short of the historical average.
Some service providers have expressed concerns about Italy's economic situation, which is also reflected in employment trends. Though job creation continued, the pace noticeably slowed, pointing to a sector that, while still expanding, is losing its vitality.”
