Latest data released by Markit - 4 November 2020

  • Prior 48.8
  • Composite PMI 49.2 v 49.2 expected
  • Prior 50.4

Italian business activity falls back into contraction territory as the services sector slumped in October amid the resurgence of virus cases in the region.

As tighter restrictions are introduced, the outlook for Q4 isn't too bright and that threatens the to destabilise the recovery phase, not just in Italy but the rest of Europe as well.

Markit notes that:

"The downturn in the Italian services sector continued into October, with the headline Business Activity Index falling to a four-month low and signalling a quicker rate of contraction. Demand conditions remained muted, as total inflows of new business fell at the quickest pace since June, in part due to a marked reduction in new orders from abroad.

"Subsequently, firms made further cuts to their staffing levels during October. The rate of job shedding was the fastest since July. The ongoing downturn also dented confidence, as the level of positive sentiment dipped noticeably to a five-month low with panellists citing concerns about the longevity of the pandemic and timeliness of the economic recovery.

"The services sector continued to drag on the private sector as a whole, with the decline in services activity outweighing a faster uptick in manufacturing production to push the private sector back into contraction territory. With stricter lockdown measures now in force across Italy, this trend is set to continue in the near-term."