Italy economy: Quick View – Exports continue to drive manufacturing sector expansion

Event

The manufacturing purchasing managers’ index (PMI), which is compiled jointly by Markit and the Italian Association of Purchasing and Supply Management, fell slightly, from 53.1 in January to 52.3 in February. This was the eighth consecutive month above the 50 point mark that separates expansion from contraction.

Analysis

Operating conditions for manufacturing firms posted further improvement in February, according to the latest PMI survey, with output and new orders continuing to rise on the back of strong foreign demand for Italian goods. Despite falling slightly from a 33 month high in January, at 54.8, the manufacturing PMI output sub-index remains substantially above the 50-point mark. Growth in new orders also fell slightly, down from 53.9 last month to 53.3 in February, but nevertheless posted an eighth consecutive positive reading following almost two years of contracting activity during a prolonged double-dip recession.

The latest PMI survey continued to highlight the dominant role played by external demand in driving Italy’s meagre economic recovery, with the export orders PMI sub-index rising to a healthy 56.6, from 55.6 in January. This was the 14th month in a row of positive export growth reported by Italian manufacturing firms, and, according to Markit, this was principally the result of expanding demand from Italy’s main European trading partners as the euro area gradually recovers from a prolonged economic downturn.

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