FX.co ★ Italy Services Activity Growth Loses Momentum

In December 2025, the HCOB Italy Services PMI decreased to 51.5, down from November’s peak of 55, which was the highest in over two and a half years, and fell short of market expectations of 54. This deceleration in output expansion occurred despite significant improvements in demand conditions. Notably, new orders surged at the most rapid rate in 20 months, primarily fueled by robust domestic demand and effective marketing strategies. Conversely, export orders experienced a slight decline. Employment saw a modest increase, while backlogs continued to diminish. On the pricing front, input cost inflation was milder than in November and below the average trend, although there were reports of rising wages and increased operational expenses. Service providers managed to pass on some of these costs to consumers, but a reduction in charge inflation suggested tightening profit margins. Looking to the future, Italian service firms remained hopeful for increased activity through 2026, supported by marketing investments and the upcoming Milan–Cortina Winter Olympics. However, their level of confidence was below the historical average.