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Italy manufacturing sector loses steam in July but continues to expand

Staff Writer | August 2, 2018
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) for Italy declined to 51.5 in July from June’s 53.3.
Italy manufacturing
Italy   Backlogs of work continued to decline
The index nevertheless remained above the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has been for nearly two years.

July’s result was negatively affected by near stagnations in output and new orders, due to faltering domestic and external demand. Because of subdued orders and production, companies’ purchasing activity declined, while inventories of both inputs and finished goods rose.

On the other hand, backlogs of work continued to decline, as companies—which have created new jobs for over three-and-a-half years—hired staff at a robust, albeit softening, pace. Input costs, meanwhile, continued to rise due to higher prices for paper, plastics and fuels.

This prompted firms to raise their output prices. Lastly, although business confidence remained optimistic, it was clouded by worries over future export trade.

FocusEconomics Consensus Forecast panelists see fixed investment growing 2.5% in 2018, which is unchanged from last month’s estimate. For 2019, the panel expects fixed investment to increase 2.1%.