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Italy’s Manufacturing Activity Eased in January

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Italy’s final manufacturing PMI fell to 53.2 in January

The Italian economy contributes about 3.0% toward global gross domestic product, and the manufacturing sector accounts for 15% of the country’s economy.

According to Markit, the ADACI Italy manufacturing PMI (purchasing manufacturers’ index) fell to 53.2 in January 2016, a fall of 2.4 points from 55.6 in December 2015. In January, Italy’s manufacturing PMI fell to its four-month low.

As a result, the iShares MSCI Italy Capped ETF (EWI) fell 0.33% on February 1. EWI fell 11.2% from its position a month prior. Italian ADRs (American depository receipts) Ferrari (RACE), Eni (E), Luxottica Group (LUX), and STMicroelectronics (STM) fell 15.7%, 2.3%, 6.9%, and 3.5%, respectively, over the past month as of February 1.

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Output growth slowed in January

After touching a 57-month high in December, Italy’s output growth slipped. However, its overall growth in production was solid, with jumps recorded by consumer, intermediate, and investment goods producers.

Export demand eased in January

Italy’s manufacturing activity experienced slower growth in January. This was mainly attributed to a slower increase in export orders in January.

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Staffing levels continue to rise in January

Though demand rose at a slower rate, manufacturers were seen raising their staffing levels in January. The backlog of work also fell further, as Italian manufacturers were adequately equipped to cope with the current level of demand.

Input costs fall sharply amid falling commodity prices

Input prices remained at lower levels due to falling energy and commodity prices. After raising sale prices in December, Italian manufacturers lowered them in January.

With the weak euro and low inflation, manufacturers in Italy are poised to benefit. The country’s manufacturing activity is growing at a slower pace, with poor growth in export demand.

With Italy’s growth easing, let’s examine Spain’s manufacturing PMI in the next article.

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