ROME (Reuters) - Italy's services sector expanded in August but at a slower pace than the previous month, a survey showed on Wednesday, amid a decline in new business in the euro zone's third-largest economy. The HCOB Purchasing Managers' Index for Italian services came in at 51.4 in August, slightly down from 51.7 in July but above the 50 level that marks growth in activity for an eighth consecutive month.
The reading was below a median forecast of 52.6 in a Reuters survey of 11 analysts. "Italy's services sector remains the driving force of the economy. However, it is becoming increasingly clear that the economic workhorse is losing momentum and vitality," said HCOB economist Tariq Kamal Chaudhry.
The survey's new business sub-index fell to 49.8 from 51.8 in July, moving below the key 50 threshold, while the employment index declined to 51.2 from 52.6 the month before. A sister survey on Monday showed Italy's smaller manufacturing sector contracted for a fifth month running in August.
The composite Purchasing Managers' Index, combining services and manufacturing, rose to 50.8 from July's 50.3, remaining above the 50 threshold for an eighth consecutive month. National statistics bureau ISTAT said this week that Italy's economy grew by 0.2% in the second quarter from the previous three months, confirming a preliminary estimate.
Analysis and Breakdown:
The latest data from Italy's services sector shows that while there is still growth, it is slowing down compared to previous months. This could indicate a potential slowdown in the overall economy of the country. The decline in new business and employment indexes are also concerning, as they suggest a weakening in the demand for services and labor.
On the positive side, the composite Purchasing Managers' Index remains above the growth threshold of 50 for an eighth consecutive month, indicating overall economic expansion. However, the slower pace of growth in both services and manufacturing sectors raises questions about the sustainability of this expansion.
For investors and individuals in Italy, this data suggests a need for caution. It may be a good time to review investment portfolios and assess the potential risks in the market. Businesses should also be prepared for a possible slowdown in demand for their services. Overall, staying informed and being proactive in response to these economic indicators is key to navigating any potential challenges ahead.
