Services activity in Italy grew in June after the marginal decline in the middle of the quarter: the Markit PMI services index it rose to 51,9 in June from 49,8 in the previous month. Employment marks fastest increase in 2016, inflation hits 13-month high.
June new order flow growth increased at the fastest pace in four months, although backlogs fell for the tenth consecutive month and at a faster rate than in May. June saw headcount growth for the ninth consecutive month, at the fastest rate this year. The tariffs applied in June by companies in the service sector decreased, continuing a trend we have witnessed on a monthly basis since August 2011.
The rate of contraction was sharp and broadly in line with that recorded in each of the previous two months. The rate of cost inflation, which accelerated for the third consecutive month, was actually the strongest in more than a year. Finally, the June survey indicated a weakening of service sector confidence in the prospects for economic activity for next year. According to Phil Smith, economist at Markit and author of the report, “after the drop in May, for the first time in almost a year and a half, the index has jumped forward. The faster but still moderate growth in both new orders and employment underscores the improvement in general economic conditions. However, the quarterly average PMI hit a record low since the first three months of 2015 and confidence in future business forecasts weakened further, suggesting that GDP growth has slowed from 0,3% recorded in the first quarter”.
The Italian figure is in contrast with the German figure and that of the Eurozone. Germany's PMI services index fell to 53,7 in June from 55,2 in May, a 13-month low. As regards the composite index on production, it fell to 54,4 from 54,5 in May. The Eurozone index instead fell in June to 52,8 from 53,3 in May. The composite index on industrial production remains at 53,1, stable compared to May.
