The recovery of Italian manufacturing strengthens. According to Markit's regular survey of procurement executives, the sector saw the most buoyant activity in three years in April. The Purchasing Managers' Index increased to 54 points from 52,4 points in March, marking the highest value since April 2011. In this type of survey, 50 points represent the threshold between growth and decline in activity .
According to Markit, the latest analysis showed a "significant" increase in employment levels, at the strongest rate since February 2011. It has also been positive changes in manufacturing personnel levels for six months, the longest series since 2007 although after a prolonged phase of declines.
Phil Smith, an economist at Markit, believes that Italian manufacturing has been "encouraged by the umpteenth success of exports". Production is growing and “the survey underlined a contraction in the cost load, caused by the lower price of raw materials, which consequently made it possible to apply further discounts on wholesale prices. For now this seems to be boosting sales, especially foreign sales, but certainly – concludes Smith – the risk remains that deflation will become entrenched and suffocate demand”.
Meanwhile, manufacturing is also accelerating in the Eurozone as a whole, where activity in April rose to its highest level in three months. The PMI index stood at 53,4 points, a slight increase from the 53 points in March and above the 53,3 points indicated in the preliminary estimate.
In addition to Italy, employment improvements were also recorded in Germany, Spain, the Netherlands and Greece, together with stabilizations in Ireland and Austria. In France, on the other hand, slight job cuts were recorded.
According to Markit's chief economist, Chris Williamson, developments in April paint "a positive picture" on the start of the second quarter: "The recovery of the sector is becoming general and hopefully sustainable, due to the increase in demand from part of each member state that fuels growth in other nations. However, deflationary fears remain and it is not obvious that companies, given the high unused production capacity and high unemployment, will feel comfortable raising wholesale prices.
In any case, today's data confirm the prospect of an improvement in the economic picture, and in this way remove the pressure on the ECB, which for months has been pondering possible expansionary measures, given the weakness of inflation.
