Italian industrial production misses forecasts in June, economists cut projections

Industrial production in Italy declined for a second consecutive month in June, increasing the risk that the country´s gross domestic product might be set to slow more sharply than had been expected, reflecting recent weak orders both domestically and from abroad, economists said.

Total output shrank by 0.4% month-on-month, according to the country´s statistics office, ISTAT.

Economists had anticipated a rise of 0.3%.

In terms of quarterly rates of change, which were a more reliable indicator of the underlying trend, industrial production fell by 0.4%, nearly offseting the 0.4% increase recorded over the previous three months.

"It is difficult to imagine a significant rebound in IP in the summer months. Indeed, the latest business surveys show that activity has been further slowed by a deterioration in orders, especially foreign ones, with some further weakness expected in the wake of the Brexit vote," Dr. Loredana Federico, lead Italy economist for UniCredit Research said in a research note sent to clients.

The economist also referenced recent weak trends in Italian service sector pruchasing managers´ indices and softer activity readings in construction.

Also on a quarterly basis, output of capital goods decreased by 2.4%, that of energy products by 2.5% and that of consumer goods by another 0.6%.

Federico´s forecast called for Italian GDP growth to slow from the 0.3% quarterly pace observed in the first three months of the year to a 0.2% clip.

Fabio Fois at Barclays Research was slightly more downbeat, also revising his own GDP forecast for the second quarter lower by a tenth of a percentage point to 0.1%, telling clients: "All in all, we stick to our view that growth will continue to slow in H2, entering slightly negative territory by Q4 this year but we now forecast GDP growth to average +0.7% this year from +0.8% previously expected."