Italy’s services sector expanded at its fastest pace in nearly three and a half years in August, according to the latest S&P Global Italy Services PMI.
The Services Business Activity Index increased to 55.2 in August from 52.5 in July, marking the highest reading since April 2023. A reading above 50 indicates expansion. New business growth accelerated to its strongest pace in nearly two and a half years, driven predominantly by domestic demand. Service providers attributed the rise to new customer acquisitions, improved sales performance, and the initiation of new projects.
Services exports also strengthened, posting the fastest growth since October 2025, though international demand remained subdued relative to domestic orders. Employment in the sector expanded for a third consecutive month, with hiring activity among the strongest in over a year, though the pace of job creation slowed from July. Temporary contracts accounted for most new hires.
Service providers continued to reduce their backlog of pending work for the fifth straight month. Input costs rose sharply again in August, with inflation persisting above historical trends due to higher energy, fuel, and commodity prices, as well as elevated business service costs. The pace of cost inflation showed little change from July.
In contrast, service providers increased their own prices at a slower rate, pushing output price inflation to an eight-month low. Business confidence for the coming year declined to its lowest level since May, reflecting concerns over the external environment despite optimism tied to new client wins, planned investments, and expectations of stable geopolitical conditions.
The S&P Global Italy Composite Output Index, which combines manufacturing and services, rose to 53.6 in August from 52.5 in July. This marked the second-highest reading in more than three years, as service sector growth offset a decline in manufacturing production.
