ITALY DATA: Stronger-than-expected Services PMI Helps Composite Into Expansion

The Italian manufacturing PMI remained in contractionary territory for the 10th consecutive month, a little softer than expected at 46.3 (vs 46.9 cons, 46.2 prior). In contrast to Spain, rises in input costs were not passed into output charges.

Key notes from the release:

• “A further drop in order book volumes, linked by panellists to challenging market conditions. Both total and export sales declined markedly and at quicker rates than seen at the end of 2024”.
• “Reduced customer appetite subsequently led manufacturers in Italy to decrease their production volumes”… “Intermediate and investment goods producers drove output volumes lower”.
• “Firms lowered their employment numbers again in January. The reduction was attributed by panellists to the expiration and subsequent non-renewal of contracts”.
• “Reflective of increased raw material and transportations costs, Italian manufacturers recorded a second successive rise in input price in January.”
• “Nevertheless, charges were lowered for a fifth month in row in January, in an attempt to encourage sales and to remain competitive on price”.

• MNI: FRANCE FINAL JAN MANUF PMI 45.0 (FLASH: 45.3); DEC 41.9

Dutch flash HICP inflation fell to 2.93% in January, down from 3.95% in December and also remaining notably below the 3.2% expected. This equates to a 0.83% M/M sequential decrease (+0.35% prior). The headline drop was services driven, and core HICP came in at its lowest since May 2024.

• Specifically, on services, the Y/Y print decelerated to 4.14%, notably below December's 5.86% and the lowest since June 2022. On a sequential comparison, services saw a 0.47% decrease, notably below January M/M prints of the last three years (0.17% '22, 0.60% '23 and 1.16% '24) and similar to the Jan'21 release (which was -0.59%).
• Non-energy industrial goods meanwhile continued to drop further, printing -0.09% Y/Y (vs -0.02% Dec).
• Inflation in the food, alcohol and tobacco category increased to 6.95% Y/Y (vs 6.61% Dec), its highest rate since August 2023.
• Energy inflation was negative in January, at -1.39% vs 1.48% prior, with the deceleration on the back of base effects.
• The national CPI meanwhile ticked down to 3.3% Y/Y (vs 4.1% prior).
• For reference, Netherlands represented 5.7% of the overall 2024 Eurozone HICP basket. We expect a weightings update to be published as part of the final release.