Latest data released by Markit - 3 September 2020

  • Prior 51.6
  • Composite PMI 49.5 vs 50.0 expected
  • Prior 52.5

After a brief expansion in July, Italian services sector falls back into contraction territory as new business slowed - similar to the rest of the region.

This sort of puts a dent in the narrative that the euro area recovery is moving smoothly and will be a bit of a concern if the trend persists going into the latter stages of the year.

If anything else, the slowing recovery will surely prompt the ECB to not want a stronger euro currency in case it derails the momentum even further.

Markit notes that:

"August data highlighted a renewed fall in Italian service sector activity, as weak client demand continued to weigh on the sector's performance. The level of incoming new business declined at a quicker rate, with foreign demand a key drag as new export orders fell markedly again.

"Furthermore, expectations with regards to activity over the coming 12 months remained historically subdued, with survey respondents signalling concerns about the longevity of any recovery from the pandemic.

"Whilst the easing of lockdown restrictions around the world will help to give any recovery legs, demand conditions need to revive noticeably to enable firms to ramp up output to make up the lost ground."