Unusually, Vatican City needing no prison industry (8)
I believe the answer is:
activity
'industry' is the definition.
(thesaurus)
'unusually vatican city needing no prison' is the wordplay.
'unusually' is an anagram indicator.
'needing no' suggests deleting specific letters.
'prison' becomes 'can' (the can is American slang for prison).
'vatican'+'city'='vaticancity'
'vaticancity' with 'can' taken away is 'vaticity'.
'vaticity' with letters rearranged gives 'ACTIVITY'.
(Other definitions for activity that I've seen before include "Hobby, pastime" , "Recreational pursuit" , "Occupation or exercise" , "Busy movement" , "Bustle; occupation" .)