Italy: sixth consecutive month of contraction. This is the real challenge for the government

The forecast indicator PMI for manufacturing marks a negative value, below fifty, for the sixth consecutive month. S&P Global Italy's manufacturing PMI rose to 48.5 in December 2022 from 48.4 in November, meeting market expectations and pointing to a sixth consecutive month of decline in industrial activity amid weak demand. Both production and new orders fell further, albeit at a slower pace. Purchasing activity also declined, as firms cut back on input purchases in response to weak sales. Pre-production inventories declined for the second time in three months and moderately overall. Delivery times for inputs lengthened further, however, due to reports of transportation problems and shortages, even though the delays were the least severe since September 2020. Meanwhile, employment rose marginally and prices they have continued to grow, driven by energy, materials and packaging. Business sentiment strengthened to a seven-month high on hopes of recovery in key markets, improving demand and new investment, but still remains in contraction ground.

Here is the short-term chart

And here is instead a medium-long vision, which shows us how the post-covid industrial euphoria has completely disappeared and we have returned to the spleen of 2018-19.

This is the real challenge of the Meloni government, the one to be solved in order to lay the foundations for solving all the other problems. The solution to this problem first of all requires finding the key to the problem of energy costs: just last week, Italian companies paid an abnormal energy cost compared to that paid by German and French companies. So we need to clean up all the bureaucratic rubbish that has been created in the last twenty years and which has brought about no improvement in either safety or production quality, despite having increased the weight, and cost, for companies. Without productive growth, all government programs are worth nothing, and this is the real challenge for Meloni.

The article Italy: sixth consecutive month of contraction. This is the real challenge for the government comes from Economic Scenarios .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/italia-sesto-mese-consecutivo-di-contrazione-questa-e-la-vera-sfida-per-il-governo/ on Mon, 02 Jan 2023 14:15:57 +0000.