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Revised GDP Estimate Shows Italy may be Heading Out of Recession

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Revised GDP Estimate Shows Italy may be Heading Out of Recession

Italy’s economy stagnated in the third quarter, a sign the Eurozone’s third largest economy may be heading out of recession. The revised GDP estimate came less than a month after Italy reported gross domestic product contracted 0.1 percent in Q3.

Gross domestic product is a broad gauge of economic activity; it captures the rate of expansion of total goods and services produced in the economy.

Revised estimates showed the Italian economy contracted at an annualized rate of 1.8 percent, compared to initial estimates showing 1.9 percent contraction. Stagnation in Q3 ends eight consecutive quarters of contraction, Italy’s longest recession since the post-war years. Growing business confidence and higher inventories were the biggest factors behind Q3’s slight improvement. However, domestic demand continues to wane, as Italians continue to struggle with weak employment prospects.

“We are exporting a lot and bullish on that front,” said Mauro Vandini, chief executive of tile-maker Marazzi SpA. “But in terms of domestic demand, I really don’t see any signs of recovery in the construction sector until 2015.”

According to a government official, “It’s too early to say that the recession is finished.”

The farming sector contracted 1.6 percent in the three months through September. The services and construction industries were relatively unchanged. Industrial output rose 0.2 percent, led by higher inventories.

Detailed information on industrial production was captured in a separate release, which showed factory output rose more than expected. Total factory output rose 0.5 percent in October, compared to 0.2 percent the previous month. On an annualized basis, industrial output contracted 0.5 percent, compared to 2.9 percent contraction the previous month.

Italy accounts for more than 16 percent of total Eurozone GDP. The nation’s unemployment rate soared to a record high of 12.5 percent in September. Youth unemployment rose to a record of 40.4 percent in the same month.

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