Italy Services Activity Growth Weakens

The HCOB Italy Services PMI fell to 52.3 in February 2026 from 52.9 in the previous month, though still marginally above market expectations of 52. New business growth eased compared with the previous month, despite being supported by a renewed increase in export sales. Meanwhile, employment continued to increase amid new business and diminished signs of spare capacity, with hiring activity hitting a seven-month high. On the price front, input cost inflation reached a three-month peak, driven by higher wages and rising transport, energy, fuel, and business services costs. Output prices edged up to a seven-month high, continuing an upward trend that has persisted for almost four and a half years. Looking ahead, service providers expressed more positive expectations for activity over the next year, citing anticipated new business, including wins from new clients. While the level of optimism aligns broadly with the 2025 average, it remains notably below the historical trend.

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.