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Paolo Pizzoli, senior economist at ING, points out that according to the preliminary estimate released by Istat, seasonally- and working day-adjusted Italian GDP posted a 0.2% quarterly increase in 1Q19 (0.1% YoY), beating expectations.

Key Quotes

“The chances of a positive quarterly reading clearly went up after the publication of surprisingly strong February industrial production data and March service sector PMIs, which were above the key 50 level.”

“Labour market data for March, also disclosed earlier today by Istat, provided another bit of good news. After a four-month period of stabilisation, employment increased by 0.3% month-on-month (or +60K) and unemployment declined by 3.5% (or 96K), the steepest monthly fall since July 2018, while the pool of inactive workers was stable on the month. All this translated into a surprising fall in the unemployment rate to 10.2% in March, from a downwardly revised 10.5% in February.”

“Looking ahead, confidence data published so far in April continues to point to a dichotomy between weak-ish manufacturing and healthier services.”

“All in all, today’s 1Q19 release and the scarce available data for 2Q19 confirm our forecast that Italy could post another marginally positive GDP increase in 2Q19. As for the whole of 2019, new data suggests that the risks to our current forecast of flat average GDP growth now lie to the upside.”