• Prior 44.4

Output and new orders fell but at a slower pace to end the year, but both are observing nine straight months of declines so that paints a better picture overall of Italy's manufacturing sector. HCOB notes that:

“Italy's manufacturing industry wraps up the year with a lacklustre quarter. Despite a slight increase to 45.3 in December, the HCOB PMI fails to convey any signals of hope, marking a decline in conditions from the previous month. Several companies attribute the production downturn to the persistent weakness in demand across the entire sector. According to our HCOB Nowcast, we anticipate a contraction in Italy's industrial production for the final quarter.

"Italy's industry is in a bit of a rough patch. Output is taking a nosedive, and buying is on the downswing. It seems like the industry has hardly got any backlogs of work – they have been shrinking steadily for a good year and a half now.

"It looks like there are some faint glimmers of hope in the Italian industry. At least the employment front isn't taking any more hits and input goods are getting cheaper by the day. Many blamed falling inflation on the drop in energy and raw material costs. The Italian industry is benefiting in particular from the global slowdown in demand in the manufacturing sector.

"The forecast for Italy's industry is looking a bit gloomy. Orders, whether domestic or from abroad, are taking a nosedive. Even though there is a bit of growth in future output expectations compared to the previous month, it is not exactly knocking it out of the park when you consider the long-term balance. At the December Governing Council meeting, the ECB signalled that interest rates will probably remain higher for longer. High interest rates weigh down particularly heavily from a manufacturing perspective.”