PMI Svcs Demand Conditions Weak, But Cost Inflation High: IHS Markit

Italy Services PMI remained contractionary in January but accelerated from Dec and beat expectations (44.7 vs 39.5 expected, 39.7 prior). While business activity and new orders continued to fall, the rates of decline moderated, while future sentiment improved, per the IHS Markit report.

• Of some note was continued input price inflation... "At the same time, firms registered another round of cost inflation during January, with the rate of increase the quickest for three months, albeit still well below the long-run average. Respondents cited greater utility and fuel costs, as well as additional coronavirus related expenditure as the main drivers of inflation..."
• But: "In spite of rising costs, service providers continued to provide discounts to customers during January in an effort to stimulate sales. Average charges levied by services firms decreased at a slightly quicker pace than in December, and one that was solid overall."
• On jobs: "The rate of job shedding was little-changed from December and remained sharp. Lower employment was mostly attributed to the non-replacement of leavers and use of the government furlough scheme, however."