Italian manufacturing wins in Europe: more orders and jobs

Italian manufacturing wins in Europe: more orders and jobs
Italian manufacturing wins in Europe: more orders and jobs

Orders, production and therefore the number of employed are increasing: it is the symbol that the Italian manufacturing sector is winning in Europe


New orders, growing production, more occupation: it is the spring of the Italian manufacturing industry. A signal came from the business confidence index which returned positive in March, rising for the manufacturing sector from 87.5 to 88.6 with all components improving. Yesterday the confirmation of the satisfactory state of health of the Italian sector by the Hcob PMI (Purchasing managers’IndexTm), an S&PGlobal performance indicator that takes into account new orders, production, employment, supplier delivery times and purchasing stocks .
In March the index reached 50.4, up from 48.7 in February and has exceeded the threshold of 50 for a year, even if the increase is defined as marginal. However, with the March data, Italy rises with Spain to second place among the four major European economies that have managed to reach the milestone of 50. A result resulting from a significant leap compared to February and which demonstrates how the orders of the national industry are regaining momentum.

According to the analysis, the increase in sales is due to domestic customers as foreign demand is decreasing. The increased orders pushed companies to increase production volumes and thus the spiral of declines that had been going on for 11 months was interrupted. The March survey then highlighted the second consecutive increase in employees also in administrative positions with “the high and fastest growth rate observed in a year”.
Pre-production inventories have been reduced due to companies choosing to postpone orders. And the decline in inventories was in line with a further decline in purchasing activity among Italian goods producers. However, the volume of production factors contracted at a slower pace than in previous months. The companies, another element highlighted by the study, discounted their sales prices to the maximum. Entrepreneurs’ sentiment has significantly improved regarding future production prospects. Tariq Kamal Chaudhry, economist at the Commercial Bank of Hamburg, argued in his commentary that “the Italian manufacturing sector can breathe a sigh of relief”.

After a year of difficulty, the Italian industry has emerged from the shadows. But what is causing concern is the geopolitical situation which is at the basis of the decline in foreign demand. The risks on the global stage are a cause for alarm for Italian industries which, however, continue to hire. Optimism does not seem to have faded and the hope is that market conditions will stabilize. Even if the winds of war do not seem to abate.

If the Italian production system not only holds up, but has shown signs of revival, the European one seems to be proceeding in the opposite direction. The index which monitors the health of industries in the Eurozone stood at the minimum level of 46.1, down from 46.5 in February. European manufacturing production shrank, bringing the decline to a year. Although the rate of contraction decreased to the lowest level since April 2023 and the reduction in new orders is more limited.
However, there are also signs in the eurozone that suggest an improvement in the situation, the problem is that the severity of the difficult condition of France and Germany is felt, which together with Italy and Spain represent three-quarters of manufacturing activity in the eurozone. And according to the assessment of Cyrus de la Rubia, economist at the Commercial Bank of Hamburg, “with two nations, Germany and France, which are more or less inactive at the moment, we are currently witnessing an anomalous situation.

On the other hand, according to PMI data, Italy and Spain began their recovery in March and February respectively. So far, however, this is not enough to drag the entire eurozone into growth mode, and a sustained economic turnaround will only be visible if all four nations in unison spring back into action.” In short, we have to wait for the German locomotive to come out of the stall phase. And it is precisely due to France and Spain that the very short-term forecast on GDP (which also includes PMI data) of an extension of the recession in the Eurozone manufacturing sector.
On the euro area front, however, inflation expectations are positive after the decline recorded in February. In fact, the ECB survey shows that EU consumers expect a further slowdown in prices. According to forecasts, inflation is expected to rise by 3.1% in the next 12 months (it was +3.3% in January) to the lowest level since February 2022, the date of the start of the war in Ukraine.

In this general framework, the Italian manufacturing sector can only once again toast the better performances compared to the European partners who historically guided the economy. All the data are outlining a national picture that seems to have regained its vigor. Two decrees on aid are also arriving for businesses with the aim – explained Nicola Calandrini, president of the 5th Budget Commission – of simplifying the numerous measures for companies, but also verifying their effectiveness to avoid waste. The aid – he added – will be aimed at encouraging investments, research and development, work and environmental sustainability”.

And yesterday on the occasion of the presentation of the National Day of Made in Italy, which will be held every year on 15 April, the Minister of Business and Made in Italy, Adolfo Urso, reiterated how Italian products are “beautiful, good, well-made and also sustainable”, underlining quality in the four A sectors, food, clothing, furniture and automation. These are the sectors that are showing particular liveliness, also with regards to exports, and which therefore contribute to keeping the flag of the national industry flying high. If we then add another Italian pearl, tourism, the picture is enriched with highlights.

The litmus test of the Easter holidays seems to have been successful with almost 11 million Italians traveling for a turnover close to 4 billion. With good performances from all locations, from the sea to the mountains, from cities of art to small villages. And the exploit of agritourism, an increasingly popular formula. There are now close to 26 thousand companies that offer hospitality on farms with the value of agritourism production reaching, according to data processed by Coldiretti, 1.5 billion thanks to 15.5 million presences of which 58% were foreigners .


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