Italy's services sector activity accelerated to its strongest level in three and a half years in August, according to S&P Global's latest Purchasing Managers' Index (PMI) data. The S&P Global Italy Services Business Activity Index rose to 55.2 from 52.5 in July, marking the highest reading since April 2023. The expansion, sustained above the 50-threshold that separates growth from contraction, reflects the fastest pace of service sector growth since the onset of the pandemic recovery period.
The broader S&P Global Italy Composite PMI Output Index, which combines services and manufacturing, increased to 53.6 from 52.5 in the prior month. This represents the second-highest composite reading in over three years, signaling broad-based improvement across the Italian economy. The services sector's momentum offset a continued contraction in manufacturing, where output declined for a 13th consecutive month.
New business growth in the services sector accelerated to the steepest pace in nearly two and a half years, driven primarily by domestic demand. Service providers reported gains from new customer acquisitions, improved sales performance, and the initiation of new projects. Export sales also rose, though international demand remained modest relative to domestic orders.
Employment in the services sector expanded for a third consecutive month, with hiring rates described as moderate but among the strongest in over a year. Temporary contracts were the predominant form of new hiring, while companies maintained sufficient capacity to work through existing backlogs, which have now declined for five straight months. Input cost inflation remained elevated, driven by higher energy, fuel, and commodity prices, as well as increased business service costs. Service providers raised their own prices at a slower pace than in July.
Business confidence in the services sector fell to its lowest level since May, despite support from new customer wins and planned investment spending. Optimism was tempered by concerns over the external environment, including geopolitical risks and broader economic uncertainty.
