Orders down, industry in contraction
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Hold back Europe, hold back Italy. The April surveys of the Hcob PMI manufacturing index on purchasing managers show a drop to 45.8 points for the eurozone from 47.3 in March, below the threshold (50) that separates expansion from contraction for the tenth consecutive month. The leading index signaled the fastest deterioration in sector conditions since May 2020.
A wider drop for Italy with the index settling at 46.8, down from 51.1 in March: the first deterioration in the sector’s performance recorded so far in 2023, but also the largest drop since last October.
The disappointing result of the PMI index – analysts S&P Global and Hcob explain in a note – mainly reflects the turnaround in new orders. The sample companies reported lower market activity, characterized by hesitation from both domestic and foreign customers. On the other hand, the combination of the sharp reduction in purchasing activity and improved access to inventories was however favorable for companies, with the average delivery times of suppliers being significantly shorter in April. According to the latest data, average supplier delivery times have improved at the fastest rate since May 2009.
Italy’s manufacturing economy – it is underlined – underwent a demanding April, with worsening operating conditions. That said, employment growth has been sustained, and prospects for the future have remained positive.
Signs of a slowdown also come from extra-EU exports, which grew by 6.6% in March, the lowest level since October 2021, while compared to the previous month there was a slowdown of 4.6%. However, the collapse of imports, especially energy, restores peace of mind to the trade balance, with a positive balance of over eight billion euros, more than doubled compared to the previous month.
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