Italy Manufacturing Sector Contracts For First Time Since 2016


The rate of inflation was marked and broadly in line with its long-run average.

But the looming shadow of Brexit meant firms were the most pessimistic about future prospects in almost six years.

The U.K. manufacturing outlook darkened during October, according to the latest IHS Markit PMI survey, as "trade tensions" and "Brexit uncertainty" led to a decline in new orders and employment among the nation's industrial firms.

Manufacturers reported greater pressure on capacity, with backlogs declining only fractionally and at the weakest pace in the current 14-month sequence of contraction.

Policymakers at the European Central Bank are expected to shutter their 2.6 trillion euro bond-buying programme by the end of the year and the latest survey of purchasing managers will likely make uncomfortable reading.

"Another positive note is that input costs and output pricing inflation, while still high, have eased, which is another area that has been piling the pressure on to the sector", continued Johnson. Some firms mentioned intense competition in the market, and delayed final decisions from clients.

It could have a "negative impact" on fourth-quarter growth, they said.

"Alongside muted new project intakes, firms highlighted uncertainty related to Brexit and the economy as undermining confidence", IHS Markit said.

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The comprehensive PMI output index was 53.1 percent for October, falling 1.0 percent from September's tally.

Civil engineering in October grew at the strongest pace since July previous year, offsetting the weakest growth in housebuilding and commercial construction in seven and five months, respectively.

An index reading of above 50 indicates an overall increase in economic activity, or growth, and below 50 an overall decrease. Anecdotal evidence pointed to transport shortages across North America and shipping delays at ports following typhoons in Asia.

A PMI of more than 50 points represents expansion in the manufacturing sector, and below that, contraction. The rate of increase reached a three-month high and was largely linked to higher raw material and metal prices stemming from the ongoing effects of tariffs. It showed construction output up 0.3% year-on-year in September following a dip of 0.7% month-on-month in August.

"The manufacturing sector saw a strong start to the closing quarter of 2018, with new order inflows rising sharply and business optimism spiking higher in an encouraging sign that firms expect the good times to continue into 2019".

The trend was worse in the United Kingdom, with manufacturing growth there now at the slowest level since the aftermath of the Brexit vote in 2016.

"The slowdown in the housing sector as the main driver of recent growth was unsurprising given the poor performance in United Kingdom house sales".

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