The Italian services sector ended 2024 in growth, following a slight decline in November, according to the latest HCOB Italy Services PMI Business Activity Index, produced in association with S&P Global.
The index stood at 50.7 for the month of December, up from 49.2 in November, however demand conditions failed to stabilise during the month, with new business declining for the second month in a row, albeit marginally.
Elsewhere, Italian service providers reported ‘noticeable cost pressures’, according to the report, which increased at their strongest rate for five months.
Positive end to the year
“Good news for Italy’s service providers at the end of the year,” commented Jonas Feldhusen, junior economist at Hamburg Commercial Bank. “The HCOB Services PMI rose into growth territory in December, partially offsetting the decline seen in November. The HCOB Composite PMI, a weighted average of the manufacturing and services indices, has improved overall but still indicates stagnation due to the weakness in the manufacturing sector.”
Increases in input costs were driven by a combination of wages, raw materials and energy costs, according to the report, with service providers ‘more aggressive’ in setting pries, as they sought to offload some of this cost burden to consumers.
“Rising input costs are affecting the prices of end products, which also increased in December,” Feldhusen added. “This indicates that at least some of the costs can be passed on to the end consumer. Overall, the rate of output charge inflation was moderate.”
Confident outlook
Looking ahead to the coming year, firms in the Italian services sector ‘continued to signal confidence’ in terms of their outlook, according to the report, with optimism about brighter economic and geopolitical conditions supporting this positive sentiment.
However, this remains subdued relative to the long-term average.
“Business activity in Italy’s service sector increased slightly in December,” said Feldhusen. “However, caution is advised in interpreting this, as the index indicated contraction in the previous month. Overall new orders declined for the second consecutive month in December, while for foreign orders, a trend of contraction has been observed for a longer period.
“Additionally, outstanding business has been declining for some time. This paints a bleak picture for the coming months. Future business expectations are below the 2024 annual average.” Read more here.
