Key facts
- Input cost inflation in Italy's service sector reached a 40-month high of 66.7 in May.
- The headline services PMI fell to 49.4 in May, marking the third consecutive month of contraction.
- The employment subindex rose to 50.6, and the future activity gauge increased to 59.5.
- Manufacturing input cost inflation also hit a four-year high.
- Italy's government cut its economic growth outlook to 0.6% for this year and next.
Cost pressures in Italy's service sector reached a 40-month high in May, with input cost inflation accelerating to 66.7 from 65.5 in April, according to S&P Global's Purchasing Managers' Index (PMI). The headline services PMI fell to 49.4, indicating contraction for the third consecutive month, below the 50.0 threshold that separates growth from contraction. This reading was slightly worse than the Reuters survey's forecast of 49.1. S&P Global economist Eleanor Dennison noted that services cost pressures could increase if the Middle East conflict persists. However, glimmers of hope were seen in the employment subindex, which rose to 50.6 from 50.3, and the future activity gauge, which increased to 59.5 from 59.1. The sister survey for Italy's manufacturing sector showed input cost inflation at a four-year high. The composite PMI, combining manufacturing and services, was stable at 50.4. Italy's government recently cut its economic growth outlook for this year and next to 0.6% and forecasts sub-1% growth for six consecutive years.