Italy Services Activity Growth at Over 2½-Year High

The HCOB Italy Services PMI rose to 52.9 in January 2026 from a fourth-month low of 51.5 in the previous month, beating market forecasts of 51.4. The pickup in activity lifted the headline index back above its historical trend and extended the current growth sequence to fourteen months. Output increased despite slower growth in new orders amid a sharper decline in export sales. Additionally, employment continued to rise, with firms hiring across a wide range of roles, though the pace of job creation was marginal. Backlogs of work fell slightly again, suggesting that capacity is broadly aligned with current workloads. Regarding prices, input cost inflation eased to a three-month low, even as staffing and energy expenses rose further. However, output charge inflation accelerated to a six-month high. Lastly, business expectations weakened for a second consecutive month, reaching a five-month low amid concerns over competitive pressures and subdued economic prospects.

The HCOB Italy Services PMI dropped to 51.5 in December 2025 from November’s just over two-and-a-half-year high of 55, below market expectations of 54. The slower expansion in output occurred despite a marked improvement in demand conditions. New orders grew sharply at the fastest pace in 20 months, driven mainly by strong domestic demand and effective marketing initiatives. Export orders, on the other hand, fell slightly. Employment increased marginally, while backlogs dropped further. Regarding prices, input cost inflation was softer than in November and below trend, despite reports of rising wages and higher operating expenses. Service providers passed on part of these costs to customers, though charge inflation eased, indicating pressure on profit margins. Looking ahead, Italian service firms remained optimistic that activity would rise through 2026, underpinned by marketing investment and the Milan–Cortina Winter Olympics. However, confidence fell below its historical average.

The HCOB Italy Services PMI rose to 55 in November 2025 from 54 in October, above market expectations of 54 and marking the highest level since April 2023. The latest data was consistent with a sharp increase in output. New orders also continued to rise, extending the growth trend that began in February, attributed to new client acquisition. This came despite a renewed decline in export orders amid subdued international demand. Expectations for the year ahead improved to a four-month high, with growth expected to arise from new customer wins and investment spending. In support of growth projections, employment rose for the tenth consecutive month. Firms also reported some spare capacity, as backlogs declined slightly. Meanwhile, inflationary pressures intensified, as input cost inflation climbed to its highest since June, driven by rising wages and energy costs. Service providers also raised their selling prices to partially offset these cost increases.