Italy manufacturing activity remains weak in January

The HCOB Italy Manufacturing PMI inched up to 46.3 in January 2025 from 46.2 in December, falling short of market expectations of 46.8 and marking the tenth consecutive month of contraction amid ongoing weak demand.

Italy manufacturing activity remains weak in January

The decline in new orders deepened, reflecting subdued domestic and international market conditions, while production volumes contracted at a marginally slower rate. Amid lower demand, firms continued to scale back purchasing activity, further reducing input stocks in an effort to control costs and improve efficiency. Employment levels also declined, but the pace of job shedding eased compared to previous months, suggesting a potential stabilization in labor market conditions.

Input costs rise again

On the pricing front, input costs rose for the second consecutive month, recording their steepest increase since August 2024, driven by higher raw material and transportation costs. However, in a bid to remain competitive, manufacturers cut output charges at the fastest rate since March 2024, highlighting the ongoing pressure on profit margins.

Confidence improves

Looking ahead, business confidence improved notably, reaching its highest level since last August and exceeding the long-term series average. Optimism was fueled by expectations of greater political stability on the international stage and hopes of securing new clients in key markets, which could help revive growth in the sector.