Italy factory activity shrinks in August as PMI misses forecasts

• Prior 51.3

Key findings:

• Output fell again as demand weakened
• New orders recorded their sharpest drop in nearly 18 months
• Production volumes declined for the first time in seven months
• Cost pressures eased as purchasing activity saw a steep decline

Comment:

Eleanor Dennison, Economist at S&P Global Market Intelligence, said:

"The impact of unfavourable demand conditions rippled through the Italian manufacturing sector in August. There was evidence of particular weakness in the domestic market, with export sales falling to a comparatively softer degree. This drop in new orders was sufficient enough for firms to lower their production volumes for the first time in seven months and to sharply reduce their input purchasing.

"The external environment continued to play a crucial part in keeping cost pressures elevated and disrupting supply chains. However, subdued market conditions and reduced demand for inputs means things are slowly moving in the right direction on both the cost and supply chain front.

"On a brighter note, manufacturers returned to hiring in August as their confidence in the 12-month outlook improved. A number of firms are hoping for a pick-up in market conditions as the year closes out."