Italian industry boosts economic outlook

Italian industrial production rose more than expected in August, signalling that the recovery in the euro region’s third-biggest economy is gaining pace.

Industrial output increased 1.2% from July, when it rose 0.1%, Italy’s national statistics agency Istat said yesterday.

The median estimate in a Bloomberg survey of 19 analysts called for a 0.1% monthly rise. On an annual, workday adjusted basis, industrial production in August was up 5.7%, about twice the estimated 2.9% rise.

“The production rise is an important support factor for economic growth in the third quarter,” said Loredana Federico, chief Italian economist at UniCredit. Data also backs expectations of a “recovery in investments, particularly in machinery and equipment.”

Italy’s manufacturing confidence rose last month to the highest in a decade. Consumer morale also gained as both executives and households shared the government’s optimism about the pace of recovery.

Italy’s GDP will expand 1.5% this year and at a similar pace in 2018 and 2019, Prime Minister Paolo Gentiloni’s government said in its most recent projections.

Istat’s leading indicator is “reinforcing the growth perspectives in the short term,” bolstered by the manufacturing sector and investments, the statistics bureau said last week in its monthly economic report.

The August production increase was the fourth consecutive monthly rise and was led by gains in intermediate goods such as basic metals, rubber and plastics.

“The latest indications from our survey among executives tell us that the companies are accelerating investments in this second half of the year,” Bank of Italy head of economic research Eugenio Gaiotti told the Parliament’s Budget Joint committees last week.

Milan’s FTSE MIB stock index was little changed after the production report, falling 0.83% in early trade. The yield on Italy’s 10-year bond was unchanged at 2.12%.

Bloomberg