News Analysis: Positive Italy PMI signals good second half year

Italian manufacture rose to their highest levels in recent months in April, a new survey of key purchasing managers showed, something analysts said could be some much-needed good news for the economy - though probably not for several months.

The ADACI Italy Purchasing Managers' Index, or PMI, produced by financial information services company Markit, rose in April to 53.8 points, up from 53.3 points in March. The level is the highest in a year, and the second highest reading in the last four years.

Nearly as importantly, it remained above the 50-point threshold generally seen as indicating an expansion in manufacturing activity.

Markit said that managers surveyed attributed the rise in part to strong export orders sparked in part by the weak euro. Domestic demand also played a part.

But expert analysts said the index's rise also had a lot to do with opinion.

"Any time you are dealing with an indicator based on a survey rather than concrete statistics it is really the opinion of the managers being surveyed," Angelo Mertz, a macroeconomics analyst with ABS Securities, told Xinhua. "I always say that a survey of opinions is partially based on what is happening and partially based on what those surveyed think will happen."

Either way, according to La Sapienza University economic statistics researcher Alessandro Polli, data from sources like the new Markit index are leading indicators, meaning they shed light on what the future could hold.

"It's a leading indicator," Polli said. "So purchasing managers see production rising? Well, they know their businesses better than we do, and so it means something. But we have to wait a few months to know what it means."

Polli continued: "Let's see if domestic demand starts to rise. Let's see if prices rise. Let's see if companies start to take on new workers."

Italy continues to benefit from a weak euro, cheap fuel prices, and low bond yields. But despite that, debt and deficit levels remain problematically high, unemployment levels near record levels, and despite a slight improvement in recent months, economic growth rates continue to trail those for the European Union as a whole.

"These secondary indicators we see are painting a mixed picture," said Mertz. "Sometimes they can be difficult to interpret correctly. We won't know for sure until we start seeing some of these primary indicators like economic growth and unemployment show some improvement." Endit