Italy: Soft industrial production casts shadows over 3Q18 growth - ING
Paolo Pizzoli, Senior Economist at ING, notes that in July, the seasonally adjusted industrial production of Italian economy contracted 1.8% month on month (from a downwards revised +0.3% in June), doing much worse than expected.
Key Quotes
“The annual working days adjusted measure, better suited to monitor the trend in production, was even worse, signalling a 1.3% YoY contraction (from +1.4% YoY in June), the worst reading since January 2015.”
“A quick look at seasonally adjusted broad aggregates shows that softness was broad-based, affecting the production of investment goods (-2.2% MoM), consumer goods (-1.7% MoM), intermediate goods (-1.2% MoM) and energy (-0.8%).”
“August manufacturing PMI came in very soft at 50.1, very close to the contraction territory, which casts some shadows for 3Q18 growth.”
“On past norm, the July-August composite PMI reading would be compatible with a 0.1/0.2% quarterly GDP expansion in 3Q.”
“Today’s release shifts the balance of risks towards 0.1%, which would be still compatible with our average yearly GDP growth forecast of 1.1% for the whole of 2018.”
“More food for thought for Italian political actors currently negotiating the content of the next budget.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
