Italian industrial production for July beats forecasts

Industrial production in Italy beat economists' forecasts in June, with large gains evident across all categories of goods, although weakness in foreign orders was expected to take its toll in coming months.

Total output, excluding that from construction, rose by 0.4% month-on-month, according to ISTAT, versus projections for growth of 0.2%.

Production of consumer goods was particularly strong, rising by 2.0% over the month, led by a 3.6% jump in that of durable goods.

Capital goods production grew by 1.1% and that of intermediate ones by another 0.9%.

Energy output was up by 0.5%.

In calendar adjusted terms, industrial production slipped by 0.3% in annual terms.

By industrial sectors, mining output increased by 2.2%, that from manufacturing by 0.9% and that of the energy sector by 0.1%.

June's fall of 0.4% over the month was revised higher by one tenth of a percentage point to -0.3%.

"While better than initially expected thanks to today’s positive surprise, indications available so far point in the direction of a further weak contribution of industrial activity to GDP growth in the third quarter, after a 0.4% qoq IP decline in 2Q16.

"[...] More importantly, the manufacturing PMI survey suggests a slowdown in industrial activity during 3Q16, mainly due to ongoing weakness in foreign orders, within a context of sluggish global trade (including the Brexit effect) and a (temporary) halt in domestic demand. Regarding the latter, we think that some uncertainty about the economic prospects and financial market conditions may have curbed consumer spending somewhat," said Dr.Loredana Federico at UniCredit Research.

"All in all, despite the rebound of industrial output in July, we remain concerned regarding the prospects for the economy and we think that the slowdown in Q2 is more deep-rooted than one might think," chimed in Clemente De Lucia at BNP Paribas.