This is disappointing as Italy’s manufacturing sector falls back into contraction in April. There were further declines in production and new orders, with input prices also increasing for the first time since January 2023. The HCOB notes that:
“The Italian manufacturing sector has taken a step backwards. In April, the HCOB manufacturing PMI fell after just one month above the 50.0 mark. This indicates that the economy may not be on as strong a recovery trajectory as previously thought. Downside risks posed by input price inflation and interest rates continue to make life difficult for Italian industry.
“There is a lot of shadow and little light. To draw optimistic conclusions from the figures, you have to look closely. The employment index fell in April compared to the previous month but still shows growth. However, if weak demand for Italian manufactured goods persists, the hiring surge could reverse. Another source of optimism: the improvement in supplier delivery times despite persistent tensions in the Red Sea. However, the significant easing of supply chains also reflects weak demand.
“Inflationary concerns are resurfacing in the industry. The recent weakness in demand is compounded by rising input prices. A review of oil markets reveals that geopolitical tensions in April, for example, briefly pushed the price of Brent crude above $90 per barrel. According to the industrial companies surveyed, producer prices had to be reduced due to weak demand. Although the producer price index increased compared to the previous month, it remains in contraction territory for now.
“The outlook is mixed. Total and foreign order intake decreased significantly from the previous month. The contraction, particularly in new export orders, is worrying and must continue to be closely monitored. Surprisingly, the future production index is significantly higher than its historical trend. The companies surveyed cite the hope of a market recovery as the main source of their optimism.”
cnbctv18-forexlive
