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Italy’s Industrial Sector Remains Weak

James Boston
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Italy’s Industrial Sector Remains Weak

Italian industrial data came in decidedly mixed this morning and although some improvement is evident this sector of the Eurozone’s third largest economy remains in a weakened state. Industrial Sales when measured month on month represent the only expansionary reading from the sector, the seasonally adjusted number is showing growth of 1.0% for July following a fall of -1.0% in June. The year on year figure, without the seasonal adjustment, has however fallen off sharply, this is now registering a drop of -1.3% compared to June’s moderate growth of 0.1%.

The Industrial Orders data is not faring any better than the Industrial Sales, month on month the Orders figure has contracted by -1.5%, this seasonally adjusted number however represents a moderate improvement on the June reading of -2.1%. Month on month the Industrial Orders have fallen -0.7% which shows a sector still in contraction but at least the pace of falling growth has slowed from the June rate of -2.5%.

The International Monetary Fund (IMF) last week announced that it does not foresee Italy exiting recession this year. The agency reported that it is projecting a full year GDP contraction of -0.1% for the Italian economy in 2014, with a healthier 1.1% growth rate in 2015 but only if several conditions are met. The IMF however went on to say that it’s research was conducted during the summer and that based on deteriorating data readings in the interim it expects to further lower Italy’s growth forecasts when it releases it’s global outlook report later next month.

The IMF praised the government of Matteo Renzi for attempting to address the much needed structural reforms that are hampering Italy’s return to growth. They went on to note however that the actual implementation of these reforms was moving at a very slow pace and that Italy’s future success will hinge on the ability of Government to successful push the reform package through against much resistance and opposition from vested interests.

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