Italy manufacturing PMI up slightly for December to 55.0

The Royal Bank of Scotland /ADACI Purchasing Managers' Index for Italy remained well above the 50.0 no-change mark in December to signal further robust growth of the Italian manufacturing economy. Posting 55.0, the headline index was up marginally from 54.8 in the previous month.

“December figures provided further evidence that growth of the Italian manufacturing sector steadied at a marked pace in Q4,” said Alessandro Mitrovich, RBS country head for Italy. “Combined with positive October industrial production data from ISTAT, these figures indicate that the manufacturing sector still has considerable growth momentum going into the start of 2007, and should provide a positive contribution to Q4 GDP. However, risks for short-to-medium-term prospects remain, as new order growth continues to tail off and backlogs of work fell for the second month running. As a whole, 2006 was a positive year for the Italian manufacturing sector, with growth of production the strongest since 2000 and well above that recorded in 2005.”

The PMI was bolstered by higher levels of output and new orders. Employment also rose vs. the previous month, though the rate of job-creation was only modest.

Italian manufacturing production rose for the 19th consecutive month in December, reflecting higher levels of new business and improvements in efficiency.

Despite remaining robust, the latest increase of new business was the weakest since January.

The rate of input cost inflation faced by Italian manufacturers eased to a 12-month low in December. Output prices also rose at a weaker pace than in the previous month, with the rate of inflation the slowest since January.

Purchasing activity rose for the 14th consecutive month in December. Panelists stated that higher input buying reflected recent gains in new orders and efforts to replenish raw material stocks.

Pre-production inventory levels increased (after contracting marginally in November), while stocks of finished goods fell for the 15th month in succession.

Backlogs of work fell (albeit only marginally) for the second successive month, reflecting improvements in efficiency and fewer instances of delivery delays.

Expansion of the Italian manufacturing workforce was recorded for a fourth consecutive month.