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Paolo Pizzoli, senior economist at ING, points out that Italian industrial production was surprisingly strong in May, posting a seasonally adjusted 0.9% month-on-month expansion (-0.8% MoM in April).

Key Quotes

“The working days adjusted measure, better suited to monitor the underlying trend, was down 0.7% (-1.5% in April). This provides indirect tentative evidence that the April reading might have been affected by calendar effects due to the timing of Liberation Day on 25 April.”

“There were no major changes from the sector breakdown but it did confirm that sectors topping the production rankings in 2018 have clearly slowed down over the first four months of 2019.”

“The solid investment component is worth noting, as it might indicate that the re-introduction of the “super-depreciation” measure in the “pro-growth” decree (which allowed businesses to accelerate amortisation on their investments) approved in April could help to spur investment activity over 2H19.”

“We still believe that the seasonally adjusted industrial production might marginally contract QoQ over 2Q19, and confirm our flat QoQ GDP forecast for 2Q19 and our meagre 0.1% average GDP expansion   for the whole of 2019.”