Italy August services PMI 49.8 vs 50.5 expected

<ul><li>Prior 51.5</li><li>Composite PMI 48.2</li><li>Prior 48.9</li></ul><p>With both Spain and Italy showing contractions in economic activity as well in August, it really deepens the downturn that the euro area economy is now facing towards the end of Q3. Germany is still the sickest person in the room but everyone else is also afflicted at the moment. HCOB notes that:</p><p>"The Italian services sector is now firmly in the grip of a recessionary threat. We're seeing most probably the beginning of a
recession in the services sector, in line with the manufacturing sector, which has seen a decline in output since the second
half of last year. The HCOB Services PMI has fallen by 1.7 index points to 49.8 for the month of August, in comparison to
the preceding month. This marks the poorest reading since November 2022 and is a continuation of a four-month-old
downward trend in the index.
</p><p>“Companies do not seem to harbour belief in a swift recovery of the Italian services sector. New orders both domestically
and abroad are now dwindling. In addition, the business outlook has taken a hit compared to the previous month and,
despite growth projections, confidence lags significantly behind its long-term average. Service providers continue to express
concern over rising interest rates and their adverse impact on market activity.
</p><p>“Given bleak prospects, services companies, along with those in the manufacturing sector, are now trimming their workforce
numbers. The historically low unemployment figures recently published by ISTAT for Italy, at 7.3% in June, are likely to see
an increase in the near future.
</p><p>“In addition to subdued business activity, service providers are grappling with high prices. Currently, input costs are on the
rise and even speeding up. This contrasts with output prices, which could only be increased at a lower pace than the month
before, and means that profit margins continue to suffer.”</p>

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