The HCOB Italy Services PMI dropped to 51.5 in December 2025 from November’s just over two-and-a-half-year high of 55, below market expectations of 54. The slower expansion in output occurred despite a marked improvement in demand conditions. New orders grew sharply at the fastest pace in 20 months, driven mainly by strong domestic demand and effective marketing initiatives. Export orders, on the other hand, fell slightly. Employment increased marginally, while backlogs dropped further. Regarding prices, input cost inflation was softer than in November and below trend, despite reports of rising wages and higher operating expenses. Service providers passed on part of these costs to customers, though charge inflation eased, indicating pressure on profit margins. Looking ahead, Italian service firms remained optimistic that activity would rise through 2026, underpinned by marketing investment and the Milan–Cortina Winter Olympics. However, confidence fell below its historical average.