Italy's Service Sector Sees Growth in October

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Italy's Service Sector Sees Growth in October

According to the latest HCOB Purchasing Managers' Index (PMI), Italy's service sector showed accelerated growth in October. The index measuring the sector's health rose from 50.5 in September to 52.4, indicating an expansion in activity. This performance surpassed the expected median forecast of 50.5 from 12 analysts.

The increase in the PMI broke a declining trend that peaked in March at 54.6 and lasted for six months. The rise in October was primarily driven by an increase in domestic market orders, with the new business indicator climbing from 49.3 in the previous month to 51.9. However, the new export orders sub-index remained below the growth threshold for the third consecutive month.

Despite this positive development in the service sector, the employment index fell from 50.9 to 49.9, indicating a slight decline. This situation points to a marginal decrease in the workforce within the sector.

In contrast to the gains in the service sector, Italy's relatively smaller manufacturing sector contracted for the seventh consecutive month in October, with the pace of decline quickening compared to the previous month, as reported in a sister study published on Monday by NASDAQ:MNDY.

The Italian economy overall showed signs of stagnation. The national statistics bureau, ISTAT, reported last month that the country's gross domestic product did not grow in the third quarter. This disappointment raised doubts about future growth prospects.

However, the composite PMI, which includes both services and manufacturing, painted a more optimistic picture. The index jumped from 49.7 in September to 51.0 in October, crossing the 50-point threshold that indicates expansion.

HCOB economist Jonas Feldhusen commented on the divergence in the Italian economy, stating that the composite PMI provides cautious optimism, as it signals a return to growth largely driven by demand from the service sector. This development underscores the uneven pace of recovery across different sectors of the Italian economy.