Italy Manufacturing PMI Signals Modest Recovery

The HCOB Italy Manufacturing PMI rose to 50.6 in February 2026, up from 48.1 in January and above the market consensus of 49.5. The reading, the highest in three months, indicated a slight improvement in operating conditions, as output and new orders increased following two months of decline, despite export sales falling at their fastest pace in five months amid elevated global uncertainty. Employment edged up only marginally, limiting purchases of inputs. Meanwhile, input cost inflation reached its highest level since October 2022, and output prices rose at the fastest pace in ten months. Business confidence, however, strengthened to its highest level in over five years.

The HCOB Italy Manufacturing PMI rose slightly to 48.1 in January 2026 from 47.9 in December, in line with market expectations. Demand conditions were still weak, with new orders and exports falling again, though at a milder pace, reflecting fragile markets and some order cancellations. Production also declined modestly, limited by subdued demand and, in some cases, raw material constraints. Lower output led firms to cut purchases and reduce inventories, helping ease pressure on supply chains and shorten delivery times. Despite softer input demand, costs jumped at the fastest pace in over three years due to higher raw material prices, prompting manufacturers to raise selling prices. Employment was the only area of growth, with firms adding staff cautiously. Looking ahead, manufacturers were more optimistic, with confidence near a four and a half year high on hopes of new products, lower borrowing costs and a gradual sector recovery.

The HCOB Italy Manufacturing PMI fell to 47.9 in December 2025, down from 50.6 in November and below the 50.0 forecast. The decline marked the steepest downturn since March, led by consumer goods producers, while other segments experienced only mild contractions. New orders fell after a month of growth, weighed down by heightened uncertainty and sector-specific challenges, particularly in steel and autos. Output declined at the fastest pace in nine months, and employment continued to fall, marking a full quarter of job reductions. On the price front, input cost inflation eased from November’s three-year high, prompting manufacturers to modestly lower their selling prices. Despite the slowdown, sentiment improved slightly, supported by investment in product launches and plans to expand into new markets.