The HCOB Italy Manufacturing PMI rose to 49.8 in July 2025, up from 48.4 in June and beating market expectations of 49.0. This marked the slowest pace of contraction in the manufacturing sector since March 2024, edging closer to stabilization. New orders declined only marginally, while the drop in output was less pronounced than the previous month. Employment fell for the tenth consecutive month, though the decline was primarily due to voluntary departures rather than layoffs. Despite the lower staffing levels, firms continued to work through backlogs, albeit at a slower rate than in June. On the pricing front, both input and output prices rose in July for the first time in three months, driven by higher raw material costs. Looking ahead, business confidence improved, supported by optimism around economic and geopolitical conditions, the launch of new products, and recent client wins that bolstered growth expectations.