Italy December manufacturing PMI 46.2 vs 44.8 expected

January 02, 2025 at 08:45AM

Prior 44.5

It’s an improvement to the month before but remains in contraction territory, with both output and new orders also slipping in December. HCOB notes that:

“The Italian manufacturing sector remains in a challenging situation at the end of the year. The sector continues to struggle
with weak demand from the eurozone, high energy costs, and significant issues in the automotive sector, where the
production decline is particularly pronounced. Although the HCOB PMI index value has slightly increased in the final month
of the year, it has remained in the recessionary zone since April 2024.

In December, there were no significant changes regarding production and demand. The situation remains similar to previous
months, with continuing declines in new orders from both domestic and foreign markets. Production is further reduced. This
general weakness in the manufacturing sector is affecting the workforce. Large waves of layoffs have not yet occurred, but
reports indicate that temporary contracts are not being renewed and departures are not being replaced.

There is little movement on the price front. Due to weak sales figures and only mild cost pressures, output prices have
slightly fallen. The poor economic situation is leading to a decrease in demand for intermediate goods, resulting in lower
input costs. Industrial companies are more likely to deplete their inventories rather than build up new stocks.

Surprisingly, the outlook has slightly improved. Anecdotal evidence suggests that companies are hoping for a recovery in
global demand, further rate cuts by the ECB, and an end to the crisis in the automotive sector. There is also hope in the
automotive sector following a meeting between representatives of the country’s largest car manufacturer, Stellantis, and the
Meloni government. The automotive company has pledged to invest 2 billion euros in Italy next year and to increase
production. The government also plans to invest around 1 billion euros and aims to relax the “Green Deal” regulations, which
are seen as a cause of the automotive industry’s weakness. This year, there have been repeated temporary plant closures
at Stellantis. However, caution is warranted in light of the measures implemented by the Trump administration.”

This article was written by Justin Low at www.forexlive.com.