Monday, September 02 08:55:49
Italian manufacturing activity expanded for the second month running in August and at a faster pace than the previous month as new orders and output increased, a survey showed today.
The data adds to signs that the euro zone's third-largest economy may be starting to emerge from its longest recession in the post-war era, helped by strong exports, even though domestic demand remains weak and unemployment high.
Prime Minister Enrico Letta is trying to revive the economy while keeping strained public finances under control.
The Markit/ADACI Purchasing Managers Index increased to 51.3 in August from 50.4 in July, slightly higher than the average forecast of 51.0 in a Reuters survey of analysts.
Holding above the 50 mark that separates growth from contraction for the second month running, the headline index reached its highest level since May 2011.
The manufacturing sector accounts for about 19 percent of Italian economic output, according to statistics office ISTAT.
Production levels rose for the third month in a row, with the sub-index measuring output reaching a 28-month high of 54.4, the data showed.
New orders rose for the second month, fuelled by greater export demand, especially for consumer goods.
Italy has posted eight consecutive quarters of economic contraction, and in inflation-adjusted terms, the economy is now smaller than it was at the end of 2001.
Most analysts expect a slight recovery towards the end of 2013, but forecast a decline in output for the whole year of almost 2 percent.
On the downside, employment in the factory sector fell for the 25th month running, and at a slightly faster rate than in July, the survey showed. Italy's jobless rate has begun to ease from May's record high, but youth unemployment is still rising.
Input prices facing Italian manufacturers rose for the first time in six months due mainly to higher raw material costs, though the rate of inflation remained below the long-term average, Markit said.
The increase in costs, which led manufacturers to raise prices charged in August following six months of cuts, is expected to continue in coming months.
"Cost pressures are likely to grow in line with demand for raw materials and should be monitored closely as they pose a threat to recovery," Markit economist Phil Smith warned. ( C ) Reuters