Italian industry is sending conflicting signals, with manufacturing orders climbing to their strongest level in more than two years even as actual output slips back. That is the conclusion of fresh analysis from Prometeia, which warns that the gap between optimism and production could leave the country facing a flat end to 2026.
According to Prometeia, industrial production dropped 1.3% month-on-month in August, reversing July’s 0.6% gain. On an annual basis, output was broadly flat, edging up just 0.2%. The figures reinforce a pattern of persistent weakness that followed a combined 1.3% contraction across May and June, and offer no clear evidence yet of the sustained rebound that businesses are anticipating. Prometeia cautions, however, that August and September readings are frequently distorted by reporting issues, producing sharp but temporary swings.
Beneath the headline numbers, manufacturing is showing some resilience. Prometeia notes that qualitative surveys of manufacturers point to a marked improvement in orders, lifting the overall manufacturing index to its highest point since 2023. Much of this momentum is linked to demand for products tied to artificial intelligence investment. So far, stronger AI-related exports have more than compensated for the drag caused by uncertainty over ongoing wars.
Yet a fuller order book does not guarantee a production upswing, at least not in the near term. Prometeia highlights that qualitative indicators for other parts of the economy slowed sharply in September, raising the prospect of weaker demand for goods and services unconnected to AI. The firm links this broader softening partly to surging inflation, which climbed above 4% in Italy in September, while noting it is not the only factor at play.
Prometeia’s weekly WEIP indicator captures this shift. After rising through July and August, the index fell back in September, from 99.6 to 99.1. While this suggests the third quarter held up reasonably well overall, the deterioration in survey data towards the end of the period calls for caution when judging the short-term outlook.
Looking ahead, Prometeia expects a 0.8% rebound in September, largely the result of a statistical effect. The outlook for October and November stays marginally positive, with forecasts of -0.2% and +0.5% respectively, supported by stronger order volumes. Taken together, however, these projections imply a 0.7% decline across the third quarter, wiping out the 0.3% gain recorded in the second. For the fourth quarter, Prometeia forecasts growth of just 0.3%, a result that amounts to near stagnation.
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