Key Findings:

  • Activity rises further, but expansion eases considerably from August
  • Growth of new work remains close to survey record
  • Record lengthening of suppliers’ delivery times

Italy’s construction sector continued on a strong growth footing during September, according to the latest PMI® data from IHS Markit, although the rate expansion of business activity eased noticeably from August’s survey record as some momentum was lost. Nonetheless, demand conditions remained strong at the end of the third quarter. Inflows of new work continued to rise, with the rate of expansion holding close to August’s peak.

Supply delays held the sector back, however, with lead times for inputs lengthening to a degree unseen since the survey began in 1999 amid widespread reports of material shortages.

Adjusted for seasonality, the headline IHS Markit Italy Construction Purchasing Managers’ Index® (PMI®) – which measures month-on-month changes in total industry output – registered 56.6 in September, signalling an eighth straight monthly increase in Italian construction activity. The latest figure was down noticeably from August’s all-time high of 65.2, however, indicating a loss of growth momentum.

That said, the average reading over the third quarter, at 59.2, represented the strongest rate of expansion since the opening three months of 2001.

Overall, the sustained upturn across the sector in September was supported by a further surge in sales at Italian constructors. New work rose for the eighth month running, with the latest increase only slightly slower than August’s record pace and still rapid. Strong client demand and government tax relief schemes drove the latest uplift in new orders, according to panellists.

As a result, companies continued to raise their purchasing activity in September, extending the current sequence of greater input buying to eight months. The rate of increase slowed from August’s peak, but was still among the quickest on record and sharp overall.

Weighing on the performance of the sector in September was more intense supply disruption. Lead times for inputs lengthened to the greatest extent on record, with panellists blaming delays on material shortages and logistical problems.

The Exporting from the UK section of the Construct UK Directory includes
– International Construction Exhibitions – UK Government Support for Exhibiting Overseas – Identifying Suitable Markets – Agent or Distributor – International Project Lead Sources

Supply issues also translated into higher costs during the closing month of the third quarter as input prices rose rapidly again. The rate of inflation was at a seven-low, but still faster than at any time in the series history prior to March. Material costs had risen due to strong demand and shortages at suppliers, according to anecdotal evidence.

Nonetheless, September data pointed to a further increase in employment, amid reports that companies were taking on staff to keep up with demand. The rate of job creation was the quickest since February 2002.

Looking ahead, firms registered sustained optimism towards activity over the next year with sentiment edging up since August. Strong demand, tax relief schemes and hopes of a continued economic recovery were all cited as reasons to be confident.

Commenting on the latest survey results, Lewis Cooper, Economist at IHS Markit, said: “September data pointed to another strong performance for the Italian construction sector. Business activity continued to rise sharply as new order growth held close to August’s survey-record pace amid reports of strong client demand, in part due to the continuation of government tax relief schemes.

“That said, some growth momentum was lost during September, with the sector held back to a degree by supply chain issues, as delivery times for inputs lengthened to an extent unseen since data collection began in 1999. Respondents primarily blamed delays on material shortages, which again had a knock-on effect on input costs.

“Despite the slowdown in activity growth in September, the third quarter as a whole saw the strongest uplift in construction output since the opening three months of 2001. As such, the sector remains in good stead as we enter the closing months of 2021, but supply disruption may yet bring more substantial challenges as companies struggle to meet demand.”

For further details, click here.

The Construct UK Sales & Marketing Directory hosts over 75 articles, 1,000 construction events and 30 different databases for download. The annual £195 (+VAT) subscription fee provides unlimited access to all resources on the site.

Keep up to date with the latest construction marketing news by registering for our regular free construction sales and marketing e-bulletin here.

Follow us on Twitter