The HCOB Italy Manufacturing PMI rose to 49.3 in April 2025, up from 46.6 in March and surpassing market expectations of 47, signaling the softest contraction in factory activity in eight months.
Italian factory activity downturn softens
Although the index remained below the 50.0 threshold that separates expansion from contraction, the improvement suggests a tentative stabilization in the sector following months of subdued performance. The modest rebound was driven by a slower pace of decline in new orders, which contracted only marginally—the mildest drop recorded in over a year—indicating that demand conditions may be gradually bottoming out.
Export orders also continued to fall, largely due to lingering uncertainty surrounding global trade tensions and the potential impact of U.S. tariff hikes. However, the pace of decline eased from March, suggesting that some international customers may be adapting to the evolving trade landscape or front-loading purchases in anticipation of further disruptions. Domestic demand, though still fragile, appears to be showing signs of resilience.
Employment in the sector declined
Employment in the sector declined for the seventh consecutive month, though the pace of job shedding remained modest. This ongoing reduction in staffing levels reflects firms’ caution in committing to long-term costs amid weak demand and uncertain macroeconomic conditions. At the same time, purchasing activity and inventories of both pre- and post-production goods continued to fall, as manufacturers focused on cost containment and leaner operations. However, the rate of contraction in both indicators slowed, reinforcing the view that the worst of the downturn may have passed.
On the cost side, input prices edged up slightly in April, largely due to higher raw material costs and supply chain adjustments linked to global pricing pressures. More notably, output charge inflation accelerated to its highest level in two years, signaling that firms are beginning to pass higher input costs on to customers—potentially a sign of recovering pricing power. Despite these developments, business sentiment among Italian manufacturers remained subdued and below the long-term average. Concerns over escalating tariffs, a still-fragile demand environment, and persistent geopolitical uncertainties continued to weigh on confidence.
Looking ahead, while the data suggests early signs of stabilization, the manufacturing sector’s path to recovery remains uncertain. Much will depend on the trajectory of global trade relations, input cost volatility, and the ability of firms to sustain competitiveness amid rising external pressures.
