- Prior 49.5
- Composite PMI 48.6
- Prior 48.1
Italian services activity marginally contracted again in December with output falling for a fifth straight month while the decline in new orders gathered pace. Demand conditions remain subdued and proved to be a drag for Italy's main sector. HCOB notes that:
"The Italian service sector is hitting the brakes right before the year-end. The HCOB PMI is stuck at 49.8 in December, signalling a standstill. This suggests that services are unlikely to give a significant boost to GDP growth in the fourth quarter. True to form, our HCOB Nowcast model isn't seeing any positive signs for Italy's GDP growth as we ring in the new year.
"Italian service folks are still on a hiring spree, even with things chilling out on the economic front. The jobs growth rate might not be setting any records, but it's the joint-quickest it's been in half a year. According to the Service Confidence Indicator published by ISTAT for November, the voices among respondents foreseeing a decrease in employment over the next three months have increased.
"Inflation for service providers is still persisting. Despite the fact that the Italian service sector hasn't been seeing any growth since July 2023, according to the HCOB PMI, inflationary pressures remain fairly elevated. The only silver lining for businesses is that the gap between input prices and selling prices has shrunk compared to the previous month. Nevertheless, the lack of pricing power remains a headache for Italy's service providers.
"The prospects for the kick-off into 2024 look pretty sobering. Both total and international orders are on the decline, leading to a predictable dwindling of outstanding business. The outlook is particularly clouded by economic uncertainty on the home front and the global economic downturn, along with geopolitical tensions abroad. The start of the year is set to be a challenging period for Italian service providers."