Strongest growth of Italian manufacturing sector in nearly seven years
Staff Writer |
Italy’s manufacturing sector enjoyed a strong start to 2018, registering the highest growth in output since early 2011 and one of the greatest rises in new orders of the past 18 years.
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Jobs were created at a faster rate as capacity came under further strain, but inflationary pressures intensified in line with growing supply-side shortages.
The headline IHS Markit Italy Manufacturing Purchasing Managers’ Index (PMI ) – a singlefigure measure of developments in overall business conditions – improved to a near seven-year high of 59.0 in January.
That was up from December’s 57.4 and represented a substantial improvement in operating conditions.
The PMI has now continuously posted above the 50.0 no-change mark for 17 months.
Latest data revealed that production amongst Italy’s manufacturing companies improved to the greatest degree since February 2011.
Growth was broadbased and underpinned by an equally impressive gain in new business.
Total new work rose at a pace only just short of November’s 17-and-a-half year record amid reports of positive demand conditions both at home and abroad.
Although the weakest for three months, new export business rose at a historically marked rate, with Europe and the USA cited as areas of new export growth at the start of 2018.
Capacity pressures mounted during the latest survey period as evidenced by another month of backlog accumulation.
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 The response from many manufacturers was to bolster employment numbers, and January’s survey indicated the second-strongest rise of employment in the survey history.
Faced with higher production requirements, companies raised their buying activity noticeably during January, extending the current period of growth to 15 months.
Nonetheless, input inventories were marginally down during the month as firms used stock to support current output growth.
Similarly, efforts to service bulging order books led to a fall in inventories of finished goods during January.
Amid reports of supply-side shortages – as evidenced by another notable worsening of delivery times in January – raw material prices continued to rise at the start of 2018.
Overall input price inflation accelerated during the month and remained historically strong.
Rising costs fed through to charges, which were raised in January to the greatest degree in nearly seven years.
Finally, Italian manufacturers remained optimistic regarding future activity at the start of 2018.
Latest data showed that nearly 42% of the survey panel is forecasting growth, with a number attributing their confidence to the recent positive trend in demand from both domestic and international clients. ■