- Prior 45.6
The downturn continues in Italy's manufacturing sector, with it staying in contraction territory for a third straight month. Weaker demand conditions continue to be the bane for most of the euro area at the moment. This led to a decline in production volumes, with the pace of the drop being the quickest in seven months. HCOB notes that:
“The Italian industry remains in solid decline. The HCOB PMI for the manufacturing sector in Italy hasn't dropped further from the previous month but still shows no signs of recovery at an index value of 45.7. Given the bleak present, it is surprising how optimistic Italian manufacturers are about the future.
“The brief uptick seen in the spring has quickly fizzled out. Output has significantly dropped compared to the previous month. Additionally, stocks of purchases and inventories of finished goods declined, further highlighting weak momentum.
“The Italian industry continues to grapple with sharply rising prices. Input costs have increased even further compared to the previous month, despite facing declining demand, which is challenging for industrial firms. These higher costs reflect elevated raw material prices and transportation costs, as anecdotal evidence suggests. Compounding the issue, manufacturers were not able to pass on the additional costs to end customers with output prices shrinking further in June.
“Employment is the sole silver lining. Although employment in the Italian industry is still slightly shrinking, the prospect of hiring is not too far off. However, to justify this, there would need to be a significant recovery in orders both domestically and internationally, which is currently not evident in the data. The long-awaited recovery of the industry, therefore, continues to elude us.”
