Italy Markit Services PMI returns to expansionary territory

FXStreet (London) - At 51.2, up from 49.4 in December, the headline Italian Markit/ADACI Business Activity Index indicated a modest pick-up in business activity at the start of the year. That marked the third increase in business activity in the past four months.

According to the report from Markit, business activity at Italy’s services firms rose slightly at the start of 2015, though further declines in inflows of new work and employment in the sector suggested business conditions remained fragile. Furthermore, the rate of decline in new work was faster than in December, and firms reduced selling prices markedly in order to support activity levels. On a more positive note, January survey data showed firms’ future expectations improve to a six-month high.

Phil Smith, economist at Markit said: “Much like the manufacturing survey before, the services data pointed to a softening of domestic market demand at the start of the year and the continuation of deflationary forces.

“January saw business activity at service providers rebound after dipping slightly at the end of last year; though at closer inspection the data weren’t so encouraging. New work inflows and employment both fell at faster rates, while charges were reduced sharply by companies as they desperately sought to boost client interest.

“Business confidence improved to recover some of the ground lost in recent months, but coming off a low base it remained subdued in an historical context.”