The latest PMI reading for Italy’s manufacturing sector, released on December 3, 2025, shows a robust improvement to 53.80, surpassing the consensus estimate of 53.20 and the November figure of 53.10. This marks the highest PMI level since mid-2024, indicating a solid expansion phase. The data, sourced from the Sigmanomics database, covers the national manufacturing sector and reflects conditions over the past month.

Drivers this month

• Stronger new orders contributed 0.40 points to the PMI increase.
• Employment growth remained steady, supporting production capacity.
• Input price inflation eased slightly, reducing cost pressures.

Policy pulse

The PMI reading remains comfortably above the 50 threshold, signaling expansion consistent with the European Central Bank’s inflation target zone. However, ongoing monetary tightening and elevated borrowing costs could temper momentum in coming months.

Market lens

Immediate reaction: EUR/USD dipped 0.10% post-release, reflecting cautious sentiment amid mixed macro signals. Italian government bond spreads tightened marginally, indicating moderate investor confidence.

Italy’s PMI at 53.80 compares favorably to the 12-month average of 51.70, underscoring a notable acceleration in manufacturing activity. This aligns with other core macroeconomic indicators showing moderate GDP growth of 0.30% QoQ in Q3 2025 and a stable unemployment rate near 7.50%. Inflation remains elevated at 3.20% YoY but has shown signs of peaking.

Monetary Policy & Financial Conditions

The European Central Bank’s recent rate hikes have increased borrowing costs, yet Italy’s manufacturing PMI suggests firms are still investing and expanding. The tighter financial conditions have not yet curtailed industrial output, but the lagged effects warrant close monitoring.

Fiscal Policy & Government Budget

Italy’s fiscal stance remains cautious, with a budget deficit target of 3.50% of GDP for 2025. Limited fiscal stimulus constrains demand-side support, placing greater emphasis on private sector resilience reflected in the PMI data.

External Shocks & Geopolitical Risks

Persistent geopolitical tensions in Eastern Europe and supply chain disruptions pose downside risks. However, Italy’s diversified export base and improved supply chain logistics have helped mitigate these shocks recently.

Supplier delivery times shortened by 0.30 days on average, while inventories rose modestly, suggesting firms are preparing for continued demand growth. Input price inflation eased to 2.10% MoM, down from 2.80% in November, reducing cost pressures.

Market lens

Immediate reaction: Italian 10-year bond yields fell by 5 basis points, reflecting improved investor sentiment. The EUR/JPY pair remained stable, indicating limited currency volatility following the PMI release.

Looking ahead, Italy’s manufacturing sector faces a mix of opportunities and challenges. The PMI’s upward trajectory suggests continued expansion, but external and domestic risks could influence the pace.

Bullish scenario (30% probability)

• Global demand rebounds strongly, boosting exports.
• Supply chain normalizes further, reducing costs.
• Fiscal stimulus is modestly increased, supporting investment.

Base scenario (50% probability)

• Steady but moderate growth continues, with PMI stabilizing near 53.
• Monetary policy remains restrictive but manageable.
• Geopolitical tensions persist but do not escalate.

Bearish scenario (20% probability)

• New supply shocks or energy price spikes raise costs.
• ECB tightens monetary policy further, dampening demand.
• Fiscal austerity deepens, reducing domestic consumption.

Structural & Long-Run Trends

Italy’s manufacturing sector is gradually shifting towards higher value-added production and digitalization. The PMI’s recent strength may reflect early benefits from these structural changes, which could enhance competitiveness over the medium term.

The December 2025 PMI reading of 53.80 confirms Italy’s manufacturing sector is in a phase of steady expansion. While monetary tightening and geopolitical risks pose challenges, the sector’s resilience is encouraging. Policymakers should balance inflation control with growth support to sustain momentum. Investors and market participants will watch upcoming data closely for signs of sustained recovery or emerging headwinds.

Insight: PMI vs. ENI Stock Price Since 2020

Since 2020, Italy’s PMI and ENI stock price have shown a positive correlation, with ENI rising during PMI expansions and dipping during contractions. The 2025 PMI increase to 53.80 aligns with a 7% rise in ENI shares over the past three months, underscoring the link between industrial activity and energy sector performance.

Takeaway: Italy’s December 2025 PMI signals a resilient manufacturing sector poised for moderate growth, balancing risks from tighter monetary policy and geopolitical uncertainties.

Author: John Smith, Senior Economic Analyst

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.

Updated 12/3/25