- Manufacturing PMI 46.9 vs. 48.6 expected and 48.3 prior.
Key findings:
- Sharper decline in new orders signalled amid subdued export sales.
- Stocks of purchases depleted at one of the sharpest rates on record.
- Input and output prices fall.
Comment:
Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:
“Italy's manufacturing sector continues its downward trend. The HCOB PMI registered another decline, reaching 46.9 points – the lowest level since June – indicating accelerating downward momentum. This weakness is not only reflective of an ongoing drop in production but also of a deteriorating order situation.
The plunge in foreign orders is particularly striking. Anecdotal evidence points to weak demand from the U.S. and neighboring European markets as primary drivers. Additionally, the weakness in the automotive sector is frequently cited as a significant factor. This is unsurprising, given the mounting pressures on the Italian automaker conglomerate Stellantis, which is expected to reduce its production in Italy by approximately one-third this year, according to reports.
The parallels to Germany's Volkswagen are clear: both companies are suffering from higher international competition, especially from China, and sluggish demand for electric vehicles domestically. Thus, factory closures are now a realistic consideration in both countries. Weaker production is seen across all sub-sectors.
The consumer goods sector is reporting not only production cuts but also job reductions. The intermediate goods sector is grappling with significant losses in new orders. In October, companies attempted to stimulate demand through price reductions. At the same time, there was a reduction in cost pressures.
“The overall picture for Italy’s industry is sobering: production is shrinking, backlogs of work are decreasing, and demand for inputs is falling. In short, the sector is moving, but in the wrong direction. Companies are responding with workforce reductions, often by leaving vacancies unfilled and letting temporary contracts expire. Against this backdrop, future prospects look significantly worse, falling well below the historical average.”
