The HCOB Italy Services PMI declined to 52 in March 2025 from February’s eight-month high of 53, slightly underperforming market forecasts of 52.5.
Italy services activity growth slows
Despite the slowdown, the index remained above the 50-mark, indicating continued expansion in the services sector, albeit at a more moderate pace.
New orders grew for the second consecutive month, though at a slower rate, signaling some resilience in domestic demand. However, export orders experienced a slight contraction in March, though they remained on an upward trajectory, nearing stabilization. Meanwhile, employment levels continued to rise modestly as businesses sought to maintain workforce expansion, supported by positive, if cautious, business expectations.
Firms clear backlogs of work
The combination of sustained job creation and softer new work inflows allowed firms to clear backlogs of work during the month. On the cost side, input price inflation surged to its highest level in nearly a year, driven by mounting wage pressures, rising energy prices, and increased raw material costs. In response, service providers raised their prices at one of the fastest rates seen over the past 12 months, passing on higher costs to consumers.
Looking ahead, a greater proportion of service providers expect business activity to increase over the next 12 months, supported by expectations of stronger consumer spending and potential policy support. However, overall business confidence fell notably, as firms expressed growing concerns about future economic conditions, particularly the impact of geopolitical tensions, inflationary risks, and slowing global growth on demand dynamics.
