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Manufacturing Sector Remains Weak

ITALY DATA

Italy October manufacturing PMI was 44.9 (vs 46.3 cons; 46.8 prior) and signalled similar weak demand conditions to Spain. Key notes from the release are:

  • "Both output and new orders fell for a seventh consecutive month and to steeper degrees compared to September".
  • "Uncertainty and weak demand conditions were cited as the main reasons behind the latest downturn [in incoming business]".
  • New work from abroad fell due to "geopolitical tensions and weak demand from foreign clients".
  • Staffing levels fell, with firms signalling excess capacity due to lower orders and output.
  • "Firms reported further reductions in raw material prices and lower transport costs" and reflected this in selling prices to try and "stimulate demand across the sector".
  • Neither 10-year BTPs nor the 10-year BTP/Bund spread reacted meaningfully to the release, with spreads remaining around 3bps tighter on the day.

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