Demand-Driven Declines In Employment Consistent With EC Survey

The Italian November manufacturing PMI came in below consensus in contrast to Spain, printing at 44.2 (vs 45.2 cons; 44.9 prior). Overall, the survey singalled demand weakness domestically and abroad which has pressured employment and inflation prospects. The fall in employment is consistent with the declines in expected employment in the EC's Business Survey, and the uptick in unemployment seen in October.

Key notes from the release are:

• "Panellists often linked the deterioration to ongoing demand weakness across the sector, which also led to a decrease in incoming new orders".
• "Demand for Italian manufactured goods from abroad also decreased in November and for the eighth time in successive months".
• "Spare capacity was signalled in November as firms cut payroll numbers and worked through incomplete orders"..."according to anecdotal evidence, the contraction in workforce numbers partly stemmed from the non-replacement of retired workers".
• "November saw firms signal continued deflationary trends. Input prices fell solidly with the rate of decline accelerating from October."
• "Panellist often mentioned that demand weakness caused raw material prices to fall. Customers also benefited from discounting in November as output prices were cut, albeit to the least extent since April".
• "Optimism regarding the outlook for output improved on the month, in part due to planned launches of new products and hopes of demand recovery".