Italy’s construction PMI falls in July

Italy’s construction sector witnessed a deeper downturn in July, as the HCOB Italy Construction PMI fell to 45.0 from 46.0 in June, marking the sharpest decline in almost two years. The downturn was largely linked by panellists to “subdued construction demand.”

Reduced activity and new order inflows, especially in residential buildings, led to this significant downturn. Firms cut back on purchasing and experienced longer delivery times, while input costs rose.

Employment fell slightly, and the outlook for future activity became notably less optimistic. The sector’s weak demand conditions and higher cost pressures contributed to the diminished sentiment.

“The latest HCOB PMI data signalled a weak start to the second half of the year for Italy’s construction sector. The primary factor driving this downturn was collapsing demand. July marks the fourth consecutive month of declining demand, with the rate of decline accelerating for the second consecutive month, as indicated by the New Orders Index.” said Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank.

“Correspondingly, companies are reducing their purchases of intermediate goods. It is therefore unsurprising that the utilisation of subcontractors is declining, reaching nearly a two-year low. Subcontractor rate increases have somewhat cooled down. All these factors contribute to plunging sentiment in the construction industry.”

Attribution: HCOB Italy Construction PMI®