Italy Industry Output Jumps in June

Italian industrial output was stronger than expected in June, rising 1.1% after an increase of 0.7% in May and posting a healthy gain in the second quarter as a whole, data showed on Wednesday.

The figures suggest Italy’s modest economic growth remains on track and may be accelerating. The 1.1% rise in output was far above market expectations of an increase of 0.2%, according to a Reuters survey of 19 analysts, and was the strongest monthly gain since December last year.

In the second quarter as a whole, output was up 1.1% from the previous three months, after declining 0.2% in the first quarter, statistics bureau ISTAT said. Italian industrial output normally shows a correlation with trends in gross domestic product, which rose 0.4% in the first quarter, accelerating from 0.3% in the last quarter of 2016.

ISTAT will release second quarter GDP data on Wednesday next week, and the Bank of Italy has said it expects a quarterly increase roughly in line with the first quarter’s rate of 0.4%.

Industrial output fell by around a quarter during a triple dip recession between 2008 and 2014, and has recovered only a small part of that during the last two years.

The government of Prime Minister Paolo Gentiloni forecasts 2017 growth of 1.1%, up from the 0.9% growth seen last year but leaving Italy in its customary position among the eurozone’s most sluggish economies.

However, recent data has been better than expected and the government is expected to increase its forecast to around 1.3 or 1.4% when it presents its 2018 budget in the autumn.

Industrial output was strong in most production categories in June, ISTAT said, with output of consumer goods, intermediate goods and energy products all rising from the month before and outweighing a small decline in investment goods.

On a work-day adjusted year-on-year basis, output in June was up 5.3%, following a 2.7% rise in May, which was marginally revised down from an originally reported 2.8%.

Widespread optimism that the euro region’s third-biggest economy is on the mend this year followed a number of recent, better-than-expected reports ranging from retail sales to the labor market where the unemployment rate fell in June, dropping to a level that matches the lowest since 2012, Bloomberg reported.

“Growth is reinforcing itself with positive signals across sectors,” Istat said in a separate report last week. The statistics agency’s leading indicator “keeps a positive direction,” it said.

Still, with confidence surveys among executives and households going in opposite directions in the last two years, some economists think that the basis for a sustainable recovery in the country is still somewhat shaky.