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Manufacturing sector in Italy shows strong output growth

Staff Writer | January 3, 2017
Italy’s manufacturing sector showed the strongest output growth for six months in December, with an upturn in new orders helping drive a further increase in employment.
Italy manufacturing
Italian economy   Markit Italy Manufacturing PMI
On the price front, input costs rose to the greatest extent since early 2012 amid reports of increasing raw material costs. However, manufacturers’ factory gate prices were raised only modestly in comparison.

The headline Markit Italy Manufacturing Purchasing Managers’ Index (PMI registered 53.2 in December, up from 52.2 in November and its highest reading since June. This pointed to a fourth straight monthly improvement in operating conditions in the manufacturing sector.

Supporting the index’s rise in December was stronger growth of both output and order books, with rates of expansion at six-month highs respectively. A marked increase in new business from abroad was a key contributing factor, with export sales showing the strongest rise since April.

The number of people in employment across the manufacturing economy continued to grow during December, in line with the trend observed throughout the past two years. The rate of job creation was identical to the moderate pace seen in November.

Higher staffing numbers helped goods producers to keep atop of growing workloads, with backlogs of work decreasing for the second time in the past three months, albeit only marginally.

Higher new orders and output requirements, meanwhile, gave a boost to manufacturers’ quantities of purchases, which rose at the fastest rate for a year in December. This in turn contributed to a rise in stocks of purchases across the sector, the first since June.

Post-production inventories, on the other hand, continued to be depleted, a trend that has been observed in each of the past six months. Elsewhere, December’s survey showed a third straight monthly increase in average delivery times faced by manufacturers.

That said, the extent of the deterioration in supplier performance was only marginal. Imparting pressure on manufacturers’ profit margins, December saw a sharp and accelerated increase in average prices paid for purchases – the fastest since February 2012.

The driving factor was a rise in the cost of raw materials, according to anecdotal evidence, with particular mention of higher prices paid for metals.

Although higher cost burdens led to another rise in factory gate prices in December, the second in as many months, the rate of increase was only marginal and slower than that recorded in the preceding survey period.