The HCOB Italy Manufacturing PMI edged down to 49.2 in May 2025 from 49.3 in April, indicating a mild contraction in factory activity. Output rose for the first time in over a year, supported by a modest rebound in export demand, particularly from Europe. New orders fell for the 14th consecutive month, though the decline was the slowest in over a year. Employment declined again, albeit at a softer pace, while purchasing and inventories fell amid subdued domestic demand. In terms of prices, input costs dropped sharply—the steepest decline since early 2024—due to lower raw material prices, while output prices remained unchanged. Suppliers’ delivery times improved at the fastest rate in a year. Looking ahead, business confidence strengthened, with firms hopeful that improving market conditions, easing inflation, and potential ECB rate cuts will support growth. However, trade tensions remain a key risk.