Italy Private Sector Regains Momentum

The HCOB Italy Composite PMI rose to 51.4 in January 2026 from 50.3 in December, signaling regained momentum but still only a modest expansion in the private sector. Growth was led by the services sector, which recorded a stronger rise in activity, while the decline in manufacturing output eased. At the composite level, new orders increased at the slowest pace in six months, as demand in the services sector moderated and manufacturing sales continued to fall. Private sector employment edged higher, with both services and manufacturing adding staff, while outstanding work declined at a slower rate than in previous months. On prices, input costs rose, particularly for manufacturers, driving overall price pressures higher, and service providers raised charges at the fastest pace in six months. Looking ahead, sentiment softened, with service sector firms expressing more cautious expectations for growth in the months ahead.

The HCOB Italy Composite PMI fell to 50.3 in December 2025, down sharply from November’s two-and-a-half-year high of 53.8, signaling the slowest pace of private sector expansion in nearly a year. Growth in the services sector moderated, while the manufacturing sector returned to contraction. At the composite level, new business expanded at its weakest rate in three months. Employment across the private sector remained unchanged in December, while firms were able to reduce outstanding business, supporting overall operational efficiency. Cost pressures eased broadly across manufacturing and services, contributing to a composite reading below its long-term average. Although the overall pace of price inflation softened, it remained elevated by historical standards. Looking ahead, manufacturers maintained a notably more positive outlook than their service sector peers, suggesting optimism about production prospects despite slowing activity.

The HCOB Italy Composite PMI rose to 53.8 in November from 53.1 in October, marking the strongest expansion of Italy’s private sector since April 2023. Growth was led by the services sector (55 vs 54 in October), which recorded its fastest increase in output, while manufacturing returned to expansion (50.6 vs 49.9). New business increased broadly across both sectors, reflecting healthy domestic demand and modest gains in export orders. Private sector employment remained broadly unchanged, as deeper cuts in factory payrolls nearly offset higher hiring in services. Backlogs of work declined across both sectors. On the price front, input cost inflation reached its highest level in eight months, while average selling price increases were moderate but the fastest since July, particularly in services. Finally, business confidence improved, with optimism rising above its historical average.