Italy manufacturing activity hits strongest rise in over two years

The Italian manufacturing sector saw its strongest improvement in more than two-and-a-half years in November, supported by healthier order books and a renewed rise in export sales.

Although production increased, growth was only slight, prompting firms to maintain lean staffing and purchasing. Meanwhile, cost pressures rose sharply, marking the fastest increase in three years.

The HCOB Italy Manufacturing PMI edged back into expansion territory at 50.6, up from 49.9 in October, signaling the first improvement in three months and the strongest performance since March 2023.

The positive reading was driven by growth in output and new orders, as well as longer supplier delivery times, often a sign of busier supply chains. While consumer goods producers saw a downturn, both capital and intermediate goods posted modest gains.

New orders rose at the quickest pace in more than three-and-a-half years, supported by stronger domestic and foreign demand. Export orders increased for the first time in six months and at the fastest rate in nearly four years. However, overall production growth remained weak, with declines in consumer goods output offset by modest gains elsewhere.

With output still below trend, manufacturers continued to cut jobs through dismissals and attrition, marking the steepest drop in four months. Firms also reduced backlogs at a similar pace to recent months.

Purchasing activity was lowered again, extending a three-and-a-half-year trend, though November’s decline was the mildest in that period. Input delivery delays were linked to logistical issues, and firms relied on existing inventories, which fell for the fourth straight month.

Operating costs rose at the fastest pace in three years due to higher raw material prices. While selling prices increased, the pace of inflation remained modest. Despite these pressures, manufacturers remained optimistic about future output, with confidence staying above its long-term average.