Italy Services Sector Contracts Less Than Expected

The S&P Global Italy Services PMI edged down to 49.4 in May 2026 from 49.8 in the previous month, but still came in better than market expectations of 49.1. The reading marked the third consecutive month in contractionary territory, as new business declined for the second time in three months and at the fastest pace in eighteen months amid challenging economic conditions, persistent price pressures, and concerns over heightened Middle East tensions. Meanwhile, employment recorded its sixteenth straight month of growth, with the latest data indicating the strongest pace of hiring in three months. On the price front, input cost inflation accelerated to a fourty-month high, primarily due to rising expenses linked to ongoing geopolitical tensions in the Middle East. Looking ahead, service providers in Italy remained cautiously optimistic about activity over the next 12 months. However, overall confidence remained subdued by historical standards.

The S&P Global Italy Services PMI rose to 49.8 in April from 48.8 in March, better than market expectations of 47.6 and indicating a near-return to growth. New business saw an uptick, despite remaining subdued and well below the long-run average. Employment also rose slightly, although the pace of hiring slowed compared to historical trends. Meanwhile, output continued to contract, as firms pointed to persistent uncertainty linked to the Middle East conflict, alongside elevated cost pressures and still-muted inflows of new work. On the pricing front, input costs accelerated to its highest level since early 2023, driven by rising energy and fuel costs as well as increasing wage bills. Looking ahead, firms retained a generally positive outlook for the coming year. However, business confidence remained significantly below its long-term average, as ongoing geopolitical tensions, particularly the risk of a prolonged conflict in the Middle East continue to cast a shadow over expectations.

The S&P Global Italy Services PMI slipped to 48.8 in March 2026 from 51.0 in the previous month, defying market expectations of 52.3. This marked a return to contraction territory for the first time since November 2024, as output declined due to fewer events following the Winter Olympics, generally soft demand conditions, and rising international uncertainty. Similarly, new business contracted for the first time in over a year, with the pace of decline the sharpest since November 2024. Meanwhile, employment levels were broadly unchanged from February, as limited hiring was offset by job cuts elsewhere. On the price front, input costs surged to a more than three-year high, reflecting higher wage pressures and increased costs for raw materials, energy, and fuel, largely linked to the ongoing Middle East conflict. Finally, business confidence fell to a seven-month low, as service providers pointed to a challenging economic outlook and heightened uncertainty tied to geopolitical tensions.