Italian manufacturing confidence falls to 4-year low

Italy’s manufacturing confidence index fell to 85.8 in October 2024 from 86.6 in September, sharply undercutting market expectations of a rise to 87.

Italian manufacturing confidence falls to 4-year low

This marked the most pessimistic sentiment among Italian manufacturers in nearly four years, reflecting broader weaknesses highlighted in recent industry surveys. The downturn aligns with the impacts of higher borrowing costs from ECB rate hikes and continuing disruptions in energy supplies due to sanctions on Russia. New orders contracted more rapidly (-26 vs. -22.7 in September), signaling weaker demand, while the backlog of orders grew slower (2.6 vs. 3.5), further straining production capacity.

Italian manufacturing production declines accelerate amid rising costs

Consequently, production declines accelerated (-21.3 vs -20), adding to concerns over Italy’s manufacturing sector's near-term outlook as firms grapple with rising operational costs and slower growth prospects. The data points to increasing caution among Italian manufacturers adjusting forecasts and potentially considering further cost-cutting measures amid an uncertain economic climate.