The Italian manufacturing industry is going through a critical phase, highlighted by recent economic data indicating a decline in manufacturing output. According to Istat’s findings in October, there is a decrease of 0.2% compared to the previous month and 1.1% compared to the same period last year. This descending trend, initiated in February, has led to an overall decline of 2.5% in the first ten months of 2023, with increasingly concrete prospects of ending the year in the red.
The sectors trends.
An examination of individual sectors reveals significant heterogeneity in performance. Sectors such as pharmaceuticals and transportation show significant growth, with transportation, in particular, recording a progress of nearly ten points in the January-October period. On the contrary, sectors like textile-apparel and wood-paper are experiencing a sharp decline, followed by chemicals, metallurgy, and rubber-plastic components.
The analysis extends to regions, with Lombardy, traditionally the main manufacturing region, closing the third quarter in the red, a situation not seen since the times of Covid. The demand for investments, measured by domestic orders for machine tools, is halved between July and September, indicating a decrease in investments in the manufacturing sector.
Additionally, the mechanical sector, which had a positive year in 2022, shows signs of slowing down in the forecasts of the industry federation Anima, with an expected decrease in production, especially in the construction-related supply chain.
Confidence indicators, such as the Istat index in October, highlight a continuous slowdown in the positive perception of businesses, while the Italo-German Chamber of Commerce notes a decline in the evaluation of German companies present in Italy.
The advisors forecast and Germany’s decline.
Prometeia and Intesa Sanpaolo project industry revenues of €1,169 billion for 2023, with a modest progress of 0.7% in current values and a decline of 0.6% when considering the average price growth. The main challenges include geopolitical uncertainty, high-interest rates limiting investments, and erosion of purchasing power for families.
Exports, although showing mixed data in October, reflect a trend of progressive weakening, with a meager 1% growth in the first nine months of 2023 compared to last year’s robust 20%. The weakness in Germany (which recorded a decline of -0.4% compared to the previous month and -3.5% compared to 2022) contributes significantly to this trend with a significant decrease in purchases of Italian products.
In summary, the Italian manufacturing industry faces significant challenges that require a thorough reflection on economic and industrial policies. Diversification of sectors and the adoption of resilient strategies could be crucial to restoring growth and competitiveness globally.
