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Manufacturing sector in Italy records slowest growth for eight months in March

Manufacturing sector in Italy
Italy   IHS Markit Italy Manufacturing PMI

Italy’s manufacturing sector continued to expand at a marked rate during March, although relatively slower market activity and supply-side constraints restricted growth.


Both output and new orders rose at weaker rates, whilst business sentiment softened to its lowest level since last summer.

Nonetheless, jobs were again added at a solid pace as workloads continued to grow.

On the price front, inflation rates for both input costs and output charges weakened.

The headline IHS Markit Italy Manufacturing Purchasing Managers’ Index (PMI ) – a singlefigure measure of developments in overall business conditions – fell from 56.8 in February to 55.1 in March.

That was the lowest level recorded since last July, although the PMI remains comfortably above its historical average.

Production and new orders both increased markedly in March, albeit at slower rates.

The gain in new work was the weakest since the start of 2017 amid reports that underlying market conditions were a little softer than earlier in the year.

That said, manufacturers continued to signal that demand remained sufficiently strong to generate a historically high rate of new work growth that tested capacity.

Backlogs of work rose for an eleventh successive month in March which in turn encouraged further staff recruitment and an expansion of the Italian manufacturing sector workforce.

Total employment has now risen consecutively on a monthly basis for over three years.

Anecdotal evidence indicated that production gains were throttled in March by ongoing delays in the delivery of inputs.

Average delivery times lengthened again to a noticeable degree, with vendors reportedly suffering from stock shortages and unable to cope with higher demand.

With this in mind, latest data showed that purchasing activity continued to rise during March, albeit to a lesser extent than in recent months.

Slower growth in part reflected difficulties in sourcing inputs, whilst some panellists also indicated a preference for utilising existing inventories.

March’s survey showed that stocks of purchases fell to the greatest degree since last August.

Meanwhile, suppliers took advantage of supply and demand imbalances by raising prices to a considerable degree.

Over 37% of panellists indicated an increase of input prices, although the overall rise was the slowest since last August.

To help soften the impact of greater costs, manufacturers raised their own charges strongly.

Finally, over 42% of panellists expect to see an increase in output over the coming 12 months.

However, the overall degree of confidence was the lowest for seven months.

 

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