Italy’s manufacturing sector is grappling with rising cost pressures, marking the fifth consecutive month of increases, according to a recent survey. The conflict in the Middle East has been identified as a significant factor contributing to this trend. The Italian S&P Global Manufacturing Purchasing Managers’ Index (PMI) recorded an input cost inflation measure of 76.5 in May, up from 75.4 in April, reaching its highest level since May 2022.

Consumer price inflation in Italy also saw a jump to 3.3% in May, driven by surging energy costs. Despite these challenges, the headline PMI, which serves as a broader measure of manufacturing activity, rose to 52.9 from April’s 52.1, indicating growth in the sector. This figure surpassed the expectations of analysts, who had predicted a reading of 51.9 for May.

The new orders sub-index increased to 51.2 from 49.1 in April, marking its highest reading in six months. Similarly, the output sub-index climbed to 53.2 from 52.4, a level not seen since March 2023. According to S&P Global, the improvement in order volumes is likely due to clients stockpiling in anticipation of shortages and expected price hikes, reflecting ongoing concerns about the Middle East conflict.

However, S&P Global economist Eleanor Dennison cautioned that the current demand boost might be unsustainable once the effects of stockpiling diminish. In response to these economic challenges, Prime Minister Giorgia Meloni’s government revised its economic growth forecast for the year, lowering it to 0.6% from previous targets of 0.7% and 0.8% for this year and next, respectively. The government projects a growth rate of 0.8% for 2028, which would represent six consecutive years of sub-1% growth.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.