Italy’s manufacturing sector recorded a considerable improvement in operating conditions during November.
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Growth in output, new orders and exports all hit multi-year highs, which placed pressure on capacity as signalled by a survey record increase in backlogs of work.
With suppliers also under strain, input cost inflation accelerated to a nine-month high whilst average output charges continued to increase at a marked rate.
The headline IHS Markit Italy Manufacturing Purchasing Managers’ Index (PMI) – a singlefigure measure of developments in overall business conditions – rose in November to its highest level since February 2011.
After accounting for seasonal factors, the PMI recorded 58.3, up from 57.8 in October.
The PMI has now recorded above the 50.0 no-change mark for 15 months in succession.
Underpinning growth was a considerable and accelerated increase in manufacturing production.
Latest data showed the strongest growth of output for 81 months, with panellists widely attributing November’s increase to strong sales gains.
New orders rose to the greatest extent since April 2000 and there were a number of reports that higher demand from abroad was a key driver of overall sales wins.
The degree to which new export orders rose was the greatest since February 2011.
In line with the recent trend, the investment goods sector performed particularly well, recording considerable increases in output, new orders and exports.
IHS Markit Italy Manufacturing PMI 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 30 35 40 45 50 55 60 IHS Markit PMI, 50=no change ISTAT Manufacturing Production IHS Markit PMI -25 -20 -15 -10 -5 0 5 10 ISTAT, y%y, 3 month moving average Sources: IHS Markit, ISTAT Intermediate goods also registered strong growth, but consumer goods continued to under-perform relative to the two other market groups categories.
Capacity in the overall manufacturing sector came under pressure during November as evidenced by a series record rise in backlogs of work (data have been collected for this variable since October 2002).
A number of manufacturers responded by adding to their payroll numbers, the net result being another marked increase in sector employment.
Manufacturers also continued to raise their purchasing activity at a historically strong rate in November, which added to pressure at already strained suppliers.
Average lead times for the delivery of inputs deteriorated to the greatest degree for over six-and-and-a-half years amid reports of stock shortages.
This helped to underpin higher prices, with latest data showing the strongest inflation of input costs for nine months.
Average output charges were also raised to a notable degree.
Finally, manufacturers indicated ongoing confidence with regard to future activity.
Buoyed by strong and rising demand, positive sentiment rose to its highest for five months. ■