Note on Italian economy - May-June 2026

In the United States, the economy continues to grow at a sustained pace, the more moderate expansion in the euro area is due to greater exposure to the energy shocks linked to tensions in the Middle East. Manufacturing in China continues to be driven by exports in high-tech sectors, against a backdrop of weak private consumption.

The outlook for global economic growth remains uncertain, although the geopolitical situation has shown a slight improvement compared with the severe tensions at the start of the year. Despite the recent fall in energy costs, the systemic effects of the conflict between the US and Iran are still weighing on global inflation.

In the first three months of 2026, Italian GDP grew by 0.3 per cent quarter-on-quarter, compared with a 0.2 per cent decline in the euro area. The annualised growth rate for 2026 stands at 0.6 per cent.

In May, the seasonally adjusted industrial production index recorded a month-on-month fall of 0.3 per cent, bringing to an end three consecutive months of growth. On average for the March–May quarter, however, the index showed a month-on-month increase of 0.9 per cent.

The number of people in employment fell in May, standing at 24 million 336 thousand. The decline affected men, women and all age groups except those aged 50 and over. By employment status, employment fell only amongst fixed-term employees. The unemployment rate, which remained stable at 6.2% in the euro area, fell to 5.0% (-0.1 percentage points compared with April).

In June, according to preliminary estimates, the Harmonised Index of Consumer Prices (HICP) rose by 3.1 per cent year-on-year, exceeding the euro area average inflation rate for the first time since October 2023 (+2.8 per cent in June; +3.2 per cent in May).

Focus: Between 2019 and the first quarter of 2026, the Italian manufacturing sector, faced with numerous international shocks, recorded sharp increases in both selling prices (+18.4 per cent) and the prices of production inputs (+17.7 per cent), as well as showing, from mid-2022 onwards, a significant rise in labour costs (+12.9 per cent). After rising in 2023, companies’ profit margins began to fall. By early 2026, there was a widespread reduction in margins across all sectors (particularly agriculture and manufacturing), caused by an increase in variable costs that outpaced the rise in selling prices.