Italian manufacturing sector slips back into contraction in September

Investing.com -- Italy’s manufacturing sector returned to contraction territory in September as production and new orders declined, according to survey data released Wednesday.

The HCOB Italy Manufacturing Purchasing Managers’ Index fell to 49.0 in September from 50.4 in August, marking the steepest deterioration in operating conditions in three months. A reading below 50 indicates contraction in the sector.

New orders decreased at a solid pace, the fastest since June, as customers showed hesitancy amid economic uncertainty. Export orders fell at the quickest rate since March, with manufacturers citing less favorable demand conditions in key markets across Europe, the US, and Asia.

Production contracted modestly in September, reversing August’s trend which had shown the strongest rise in output in almost two-and-a-half years.

Despite the overall downturn, employment rose for the first time in a year, supported by planned business expansions. Backlogs of work continued to be depleted at a solid pace.

Input costs increased at the sharpest rate since March, driven by higher raw material prices, particularly for items like copper. However, selling prices remained broadly unchanged as competition and efforts to drive new sales prevented manufacturers from passing on these costs.

Purchasing activity fell at the fastest rate in six months as firms adjusted to lower demand. Both finished goods and raw materials inventories declined for the second consecutive month.

"The joy proved short-lived: Italy’s manufacturing sector slipped back into contraction territory in September, after it expanded marginally the month before," said Nils Müller, Junior Economist at Hamburg Commercial Bank.

Despite current weakness, Italian manufacturers maintained optimism about future output, citing planned investments in new products and entry into new markets as reasons for their positive outlook.

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