It is reported that Italian manufacturing activity contracted for the sixth month running in January 2012, though at a slower rate than the month before, with orders, output and employment all declining.

The data adds to signs that the euro zone's third largest economy, mired in an acute debt crisis, is already in recession, though the survey was less negative than expected and suggests the steepest phase of the contraction may already be over.

The Markit ADACI Purchasing Managers Index rose to 46.8 in January 2012 from 44.3 in December. The index was above expectations and rose for the third month running, but it remained clearly below the 50 mark that separates growth from contraction.

A Reuters' survey of 12 analysts had pointed to a reading of 45.0, with forecasts ranging from 44.4 to 46.3.

The Italian economy, one of the most sluggish in the euro zone for more than a decade, posted a 0.2% decline in gross domestic product in the third quarter of last year, and analysts expect GDP to continue falling for most of 2012.

Employers' association Confindustria forecasts a 1.6% full year economic contraction, far steeper than the government's official projection of 0.4%.

The PMI showed Italy's manufacturing activity continued to lag that of most of its euro zone partners in January, even as activity contracted across most of the currency bloc. The flash PMI for the 17 nation area rose to 48.7 from 46.9.

New orders contracted in January 2012 for the eighth consecutive month, though the orders sub index rose sharply to 44.8 from 39.9 to its highest level since September 2011.

Output also declined at a significantly slower rate than in December, but jobs were cut for the eighth month running and at the steepest rate since October 2011. Input prices rose sharply to the highest level since June 2011, while prices charged were virtually stable.

(Sourced from www.businesslive.co.za)