- Prior 45.3
Italy's manufacturing slump eases in January amid slower declines in output and new work. However, vendor performance deteriorated for the first time in nearly a year, owing to shipping route complications in the Red Sea. HCOB notes that:
“Things are brightening up in Italy's industry. The HCOB PMI for manufacturing made a jump by more than 3 index points to 48.5. Despite contracting, output is as close to the 50 mark as it has been in ten months. In the currently dismal situation across Europe, this is remarkable. If the two-month upward trend continued, this could mean better times ahead.
“Despite clear jumps in the numbers, the sector still faces challenges. For example, in spite of a general shortage of skilled workers, employment shrunk, inventories of manufactured products are decreasing, and purchasing volumes are declining. These are all signs that the recession is progressing. Surveyed companies attribute the blame to growing geopolitical uncertainty.
“Order numbers continue to be burdened by high interest rates. However, it's encouraging to note that the pace of contraction has significantly slowed down. Nevertheless, backlogs of work continue to shrink significantly. Foreign orders have shown a notable improvement compared to the previous month, but supplier lead times have lengthened due to the situation in the Red Sea. Having said this, supply chain issues are not yet as acute as during the COVID-19 pandemic.
“Italian industrial companies are cautiously optimistic looking towards the long-term. The Future Output Index has climbed back above its long-term trend, fuelled by promising growth expectations and the hope for a market revival. Our HCOB Nowcast anticipates a slight contraction in overall GDP by 0.1% in the first quarter, primarily due to ongoing weakness across the Italian industry. However, there are some early signs of better times ahead.”
