Italy Factory Output Up

Italian industrial output rose 0.4% in March, just above market expectations, national statistics office ISTAT said on Wednesday. The March increase followed a 1% rise in February and compared with a Reuters poll of 19 analysts which gave a median forecast of a 0.3% gain.

A quarterly reading showed industrial output down -0.3% after rising a revised 1.1% in the fourth quarter of 2016, bringing to an end two consecutive quarters of growth.

Italian output usually shows a close correlation with gross domestic product, which has lagged recent indicators showing strong business confidence and factory output. Preliminary first quarter GDP data will be issued by ISTAT on May 16.

Manufacturing activity increased in March at its fastest rate in six years, according to a purchasing managers’ survey, but the Bank of Italy sees just 0.2% growth in the overall economy in the first quarter, with risks to the downside.

Italy’s chronically sluggish economy is among the biggest challenges facing Prime Minister Paolo Gentiloni, whose government forecasts a 1.1% increase in gross domestic product this year.

In March, industrial output rose in most sectors, with only the energy supply, and wood and paper goods sectors showing a decrease. On a work-day adjusted year-on-year basis, output rose 2.8%, compared with a 2% increase in February, which was revised from a previously reported 1.9% rise.

Over the first quarter as a whole the sector still contracted 0.3%–driven largely by a steep 2.2% decline at the start of the year. Shrinking output matches the performance in France at the start of the year, where overall production was also down 0.3%.