(Bloomberg) -- Italy’s manufacturers just suffered a sixth successive monthly decline in activity that signals a deep industrial recession, according to a survey by S&P Global.
An index based on responses from purchasing managers stood at 46.8 in September, compared with 45.4 in August. While the gauge showed improvement and exceeded economist estimates, it remains clearly below the 50 level indicating contraction.
“The Italian industrial economy appears to be trapped in a deep recession with no clear way out,” Tariq Kamal Chaudhry, an economist at Hamburg Commercial Bank, said in an accompanying analysis. “New orders, both domestic and international, are shrinking, and even expectations for future output have fallen well below their long-term average.”
The PMI survey did indicate a rise in factory employment, but that was mainly a response to shortages of skilled workers.
The headwinds faced by Italy’s factories are shared with peers across the continent contending with China-led sluggishness in global demand.
For the euro-zone’s third-biggest economy, where manufacturing accounts for about 16% of output, evidence of industrial woes augur further weakness after an unexpected contraction in the second quarter.
That will compound the challenge for Premier Giorgia Meloni, who was counting on growth to help buoy the public finances. Her government last week said it will delay meeting European Union deficit goals until 2026 as it upholds tax-cut promises to voters.
The budget plan now foresees shortfalls of 5.3% of GDP in 2023 and 4.3% in 2024, and anticipates that the economy will grow just 0.8% this year.
--With assistance from Giovanni Salzano, Joel Rinneby and Mark Evans.
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