Italy November services PMI 49.5 vs 48.2 expected

<ul><li>Prior 47.7</li><li>Composite PMI 48.1</li><li>Prior 47.0</li></ul><p>The contraction in the services sector eases in November but the main thing to note is that inflation pressures are flaring up again. Firms signaled a steeper rise in operating costs and passed that on to consumers through greater selling prices. HCOB notes that:</p><p>"Italy's service sector is turning more optimistic. The HCOB Business Activity PMI, which has been in contractionary territory
for four months straight, moved towards stagnation, rising by 1.8 points to 49.5 in November. An upward move in the
forward-looking Future Output Index feeds some hope that the sector might move beyond contraction in the coming months.
</p><p>"Employment remains stable, with no further decline. Amid the weak economy, service providers hesitate to ramp up hiring.
This may also have to do with wage increases, which are the result of ongoing labour shortages. Upward pressures on input
prices also came from energy, fuel and raw materials, leading input cost inflation to remain above the long-term average.
Surveyed companies struggled to pass on cost increases fully to customers.
</p><p>"Italy's service providers again reported a drop in domestic orders, citing the dual impact of high interest rates and a
decelerating economy. Companies surveyed note that foreign orders are struggling due to geopolitical uncertainties and
subdued demand. The good news is that the drop in new orders, both total and international, has softened significantly.
</p><p>"Italy's service sector experiences an ongoing order drought, highlighted by a reduction in outstanding orders during
November. Thus, it is no wonder that future activity expectation remains below the long-term average, even though the index
has increased in November. Overall, while there are some signs of stabilisation, we expect the service sector to grow at only
a rather modest rate."</p>

This article was written by Justin Low at www.forexlive.com.