ITALY DATA: August Services/Composite PMI: Still Expansionary But Momentum Slows

In a similar fashion to Spain, the Italian August services PMI was somewhat weaker-than-expected, but still expansionary, at 51.5 (vs 52.1 cons, 52,3 prior). The composite reading was above 50 for the seventh consecutive month at 51.7 (vs 51.6 cons, 51.5 prior).  

The details of the report point to weakening momentum amongst services producers in August, with growth still supported by domestic markets. Despite a rise in input costs, the report noted limited passthrough into output charges.

Key notes from the release:

• “Where panel members saw growth in output, they attributed this to recent new customer introductions and order inflows. The upturn was reportedly curbed by challenging economic conditions, however.”
• “As has been the case since February, the sustained upturn in new orders remained bolstered by the domestic economy, as export sales fell again in August.”
• “Service providers continued to add to their payroll numbers midway through the third quarter.”…“ The rate of workforce expansion was the least marked in four months”
• “Despite a stronger influx of new orders, prices charged for the provision of Italian services rose to the weakest extent in nine months in August. With only 7% of firms hiking their rates, the overall rate of charge inflation was only modest overall.”
• “In contrast, input costs rose at a sharper pace on the month. The rate of inflation was both rapid and historically elevated, though it was softer than those seen earlier in the year.”