Italy February manufacturing PMI 47.4 vs 46.8 expected

• Prior was 46.3

Key findings:

• Modest and softer drop in production volumes
• Output charges reduced again amid subdued sales environment
• Employment and purchasing fall as firms remain in retrenchment mode

Comment:

Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:

“The situation in Italy’s manufacturing sector remains bad. The headline HCOB PMI for February showed a slight
improvement, but it’s still stuck in contraction territory. Meanwhile, Istat’s latest production figures underscore the ongoing
trend of deindustrialization, and neither the HCOB PMI nor the current geopolitical climate offer much hope for a turnaround
in the short-term.

“Italy’s manufacturing sector is closely tied to Germany’s, and both are in deep trouble. The latest Flash PMI data from
Germany showed signs of the downturn easing, which could have provided a boost to Italian manufacturing, but this should
not be overestimated and is just a faint glimmer of hope in an otherwise bleak landscape. General market demand remains
weak, as evidenced by persistently subdued order levels.

“The economic malaise is taking its toll on workers, too. For the past five months, there’s been a noticeable trend of staff
reductions, corroborated by anecdotal evidence and media reports. With dwindling backlogs and empty order books,
companies are relying upon stocks of finished products rather than ramping up production. As a result, output continued to
decline.

“Given the current crisis in Italy’s manufacturing sector, one might be surprised to observe such a high level of future
confidence. This sentiment might seem unexpected against the backdrop of US tariffs. However, the prospect of a more
stable political environment in Germany following the recent elections, as one of Italy’s most important trade partners, along
with anticipated further rate cuts and a potential political shift towards more manufacturing-friendly policies from Brussels,
likely contribute to this optimistic outlook.”

This article was written by Giuseppe Dellamotta at www.forexlive.com.