Italy March manufacturing PMI 46.6 vs 48.0 expected

• Prior was 47.4

Key findings:

• Sharper decrease in output volumes
• Sustained reduction in headcounts amid signs of excess capacity
• Charges up after six months of discounting and despite softer cost pressures

Comment:

Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:

“Italy’s manufacturing sector remains in the grip of crisis, showing no signs of improvement in March, as the latest HCOB
PMIs reveal. The bad situation persists, with a further downturn in new orders linked to weakness across the production
sector. The economic environment remains unstable for the manufacturers, as reciprocal US-tariffs need to be expected,
starting April 2nd. Mid-term, the sector could benefit from the consequences of geopolitical changes.

“In particular,
deregulation from Brussels, rearming Europe and the immense German debt package for defence and infrastructure could
transmit into the sluggish Italian manufacturing sector. But the current state remains subdued, with the business outlook
deteriorating in March.

“The decline in inventory purchases and the continued reduction of stock levels paint a grim picture of an industry in decline.
Producers are increasingly optimising their capacity in response to diminished production demands. This optimisation
inevitably affects the manufacturing workforce, leading to further reductions in employment. However, many companies
strive to avoid mass layoffs by not replacing employees who leave voluntarily or retire.

“Examining price trends, input costs have risen for the fourth consecutive month. However, the current level remains
subdued compared to the historical average, and the pace of inflation has softened. Prices charged have increased on a
monthly basis after previous declines aimed at stimulating sales. Panellists attributed the latest price hike to efforts to protect
profit margins.

“All manufacturing sub-sectors are grappling with the ongoing crisis. The consumer goods sector, which had been the most
resilient according to the HCOB PMI in recent months, deteriorated again in March. The intermediate and investment goods
sectors, particularly affected by weak sentiment across Europe, faced further declines in production and orders.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.