ROME, May 6 (Reuters) - Cost pressures in Italy's service sector hit their highest level in more than three years in April, driven by the conflict in the Middle East, a survey showed on Wednesday.
The measure of input cost inflation in the Italian HCOB Manufacturing Purchasing Managers' Index accelerated to 65.5 from 64.6 in March, marking the highest reading since February 2023.
However, the headline PMI, a broader gauge of services activity, moved unexpectedly towards stabilisation after a fall in March
below the 50.0 threshold that separates growth from contraction.
In April, it stood at 49.8, up from 48.8 the month before. A Reuters survey of 11 analysts had pointed to a reading of 47.6.
The uncertainty caused by the Iran war continued to weigh on the services sector, with a knock-on effect on demand as well as an increase in cost pressures, said Eleanor Dennison, an economist at S&P Global.
"April data pointed to the largest gap in the PMI price indices since the end of 2022 as, in fear of deterring already muted demand, firms were less able to pass cost burdens onto customers," she said.
"This squeeze on margins is likely to have an adverse impact on labour market and investment outcomes if sustained."
The sister PMI survey for Italy's smaller manufacturing sector also showed input cost inflation accelerating to an almost four-year high last month.
The composite PMI, combining manufacturing and services, rose in April to 50.5 from 49.2 the month before, when it had signalled economic contraction for the first time since January 2025.
(Reporting by Antonella Cinelli; Editing by Crispian Balmer and Joe Bavier)
