- Prior 49.8
- Composite PMI 50.7
- Prior 48.6
The Italian economy returns to growth, albeit marginally, in January thanks to an improvement in its services sector. Output and sales were both up for the first time in six months but price pressures are seen intensifying in what is a setback for the ECB to start the year. HCOB notes that:
"Finally, some good news from Italian service providers. The corresponding HCOB PMI returned to growth territory in January for the first time in six months, reaching 51.2 index points. Despite global demand weakness and high prices, the sector is holding its ground, and our HCOB Nowcast, which considers the PMI indicators, anticipates service sector growth of 0.2% in the first quarter.
"In the Italian service sector, employment has increased for the third month straight. Therefore, we expect that unemployment, which stood at 7.5% in November 2023, will remain at historically low levels in upcoming months. This is supported by the return to growth of new business which helped dampen the fall of the backlog of orders.
"The development of input prices is likely problematic for Italian service providers. They have increased compared to the previous month, climbing above their long-term average. According to HCOB Services PMI survey participants, the recent rise was caused by increased fuel, utility, and labour costs. Firms were not able to increase output prices to the same degree, which means the profit margins will most likely suffer.
"Looking ahead, the sector's situation is mixed. The New Business Index has seen a significant increase compared to the previous month and is now in growth territory. However, new export business suffers from global demand weakness, particularly due to the tense geopolitical situation and economic uncertainty. Even so, the degree of optimism was the highest in almost a year."
