ITALY DATA: Dec Manuf PMI: Similar Themes To Spain; Weak Growth A Concern In '26

The Italian December manufacturing PMI was very similar to Spain. The headline index surprisingly retreated into contractionary territory (47.9 vs 50.1 cons, 50.6 prior), but year-ahead confidence ticked up.

Italian growth is expected to increase only slightly to 0.7% Y/Y in 2026, versus an expected 0.6% in 2025. We’ve previously written that while continued fiscal consolidation is positive for Italy’s own macroeconomic balances and the relative performance of BTPs, the country’s weak growth outlook presents an ongoing headwind. 

Key notes from the release:

• “Although all five PMI components imparted negative directional influences, contributions from output and new orders were the most notable”… “Of the three broad manufacturing categories, consumer goods makers signalled the sharpest deterioration, whereas contractions elsewhere were only mild.”
• “The PMI component with the largest weight - new orders - was back in contraction territory after a month of growth in November. Raised levels of uncertainty and challenges in certain sectors, namely steel and autos contributed to the downturn. Lower export orders also played a part in the weakening of sales performances.”
• “Production decisions at manufacturers in Italy were tied to new orders, leading output to also drop back into contraction”
• “Manufacturers made further cutbacks to their workforce numbers, signalling a full quarter of job shedding.”
• “Weaker demand conditions and softer cost pressures encouraged manufacturers to lower their own selling prices in December. The rate of discounting was only fractional,”
• “Despite this setback, companies were slightly more confident when asked about their year-ahead expectations for output in December. Investment in product launches and plans to enter new markets were among the reasons for optimism.”