Molto bene! Stand-out performance for Italian manufacturing vs rest of Europe

January 4, 2016

European stock markets may have had a rough start to 2016, but the first major European data releases of the year, covering momentum in manufacturing at the end of 2015, have been particularly good by recent standards.

European manufacturing momentum

While overall euro zone growth momentum still doesn’t look like it’s packing enough punch to generate any significant inflation pressures, one country which years ago was practically written off as hopeless in the midst of the sovereign debt crisis now has got some real wind behind its sails — Italy.

Indeed, the only European country that appears to be doing better for overall momentum is Sweden.

The Purchasing Managers Surveys don’t measure actual output. But Italy, which produces a lot of manufactured brand names known the world over, appears to have as much spark behind it as it did back in 2010. Sadly, that was a false start — and not just for Italy.

Italy industrial orders and PMI

If this momentum is sustained, it should translate to decent industrial orders performance.

This will come as welcome news to Mario Draghi, the Italian European Central Bank president, but more importantly, the millions of Italians looking for work.

Italy unemployment

Much will likely depend on the euro, and whether it remains relatively weak against the dollar, giving a relative boost to exports.

Loredana Federico at UniCredit sums it up this way:

Today’s outcome shows that the improvement in sentiment at companies continues – the quarterly average for the fourth quarter was a good point above the average for 3Q15 – opening the way for further progress on the recovery of manufacturing activity. The improvement in the headline index was driven mainly by further significant acceleration in output and new orders, with the increase in the new orders index mainly due to an improvement in domestic demand, which continues to benefit from low energy prices.

Graphics by Vincent Flasseur

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