- Prior was 50.4
Key findings:
- Renewed contractions in output and new orders
- Input prices rise at fastest pace in six months
- Job creation recorded for the first time in a year
Despite the slip into contraction, the details and commentary are still pretty good.
Comment:
Commenting on the PMI data, Nils Müller, Junior Economist at Hamburg Commercial Bank, said:
“The joy proved short-lived: Italy’s manufacturing sector slipped back into contraction territory in September, after it expanded marginally the month before. The headline HCOB PMI fell to 49.0 from 50.4, with the downturn affecting most of the components of the index. This latest reading marks the steepest deterioration in operating conditions in three months and highlights the fragility of the sector's recovery.
“August’s marginal expansion had been driven mainly by a surge in output. However, this momentum faded swiftly, as production declined modestly, partly reversing what was the strongest rise in over two years in August. The New Orders Index recorded its lowest reading since June, weighed down by economic uncertainty and weakening household demand. Export sales meanwhile contracted sharply, with firms reporting reduced demand from key markets in Europe, the US, and Asia.
“Despite the weakening demand environment, employment rose for the first time in a year, supported by planned business expansions and improved sentiment regarding future output. Purchasing activity and inventories continued to decline, reflecting cautious spending and efforts to manage stock levels efficiently. Cost pressures re-emerged, with input prices rising at the fastest rate since March, driven by higher raw material costs. However, firms were largely unable to pass these increased costs on to customers, as selling prices remained broadly unchanged amid competition for new work and subdued demand.
“While the current data point to renewed weakness, Italian manufacturers remain optimistic about the year ahead. Investment plans, new product development and entry into new markets are supporting a more upbeat outlook. Whether this optimism translates into sustained growth will depend on a stabilisation in demand and a more favourable global environment.”
