Italy: Disappointing industrial production data – ING

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Paolo Pizzoli, senior economist at ING, notes that Italian industrial production came in disappointingly weak in April, posting a seasonally adjusted 0.7% month on month contraction (-1% MoM in March).

Key Quotes

“The working days adjusted measure, better suited to monitor the underlying trend, posted a 1.5 YoY contraction (-1.6% in March). Admittedly, the April number might have been affected by calendar effects due to the timing of the 25 April national holiday, but we feel this only provides a partial explanation of the poor monthly turnout.”

“Industrial production still remains some 22% lower than the pre-crisis peak reached in 2007.”

“The poor reading of the investment component is worth noting, as it signals the underlying weakness in the national accounts investment component already shown by 1Q19 GDP data might be continuing over 2Q19.”

“Domestic industrial orders have recently remained weak both in the investment goods domain and, increasingly, in the consumer goods one and businesses expected production softened further recently.”

“We thus believe that industrial production might contract again over the whole of 2Q19, dragging down the meagre 0.1% QoQ 1Q19 GDP expansion to a flat reading in 2Q19.”

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