Italy factory activity contracts at slowest rate for eight months: PMI

ROME (Reuters) 1; Italian manufacturing activity declined for a 16th month running in January but at the slowest rate for eight months, a survey showed on Monday, offering a glimmer of hope that a long manufacturing slump may be bottoming out.

The IHS Markit Purchasing Managers’ Index (PMI) rose to 48.9 in January from 46.2 in December, moving close to the 50 mark that separates growth from contraction and posting the highest reading since May last year.

The data was stronger than expected. A Reuters survey of analysts had pointed to a reading of 47.5.

IHS Markit said its sub-index for new orders at manufacturers increased to 48.4 from 45.8. The sub-indexes for manufacturing output and employment also rebounded from multi-year lows but remained below the key 50 threshold.

The euro zone’s third-largest economy posted a shock contraction of 0.3% in the fourth quarter of last year, preliminary data showed on Friday, and grew by just 0.2% over the whole of 2019.

Long-running weakness in manufacturing has been offset by relative strength in the service sector, staving off a full-blown recession.

The government forecasts a modest acceleration in GDP growth to around 0.6% this year.

(Reporting by Gavin Jones, editing by Toby Chopra; ; +39 06 8522 4232; )