Italy May output rebounds despite strong euro

ROME - Italian industrial output rebounded as expected in May, rising a seasonally adjusted 0.9 percent from the previous month and improving growth prospects for the second quarter, data showed on Tuesday.

By (Reuters)

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Published: Tue 10 Jul 2007, 5:25 PM

Last updated: Sat 4 Apr 2015, 10:18 PM

April’s output was revised up to show a 0.5 percent decline from an originally reported 0.8 percent drop, and March’s data was also raised to a 0.4 percent gain, from one of 0.2 percent.

The median forecast of a Reuters monthly poll of analysts had projected output to rise 1.0 percent in May.

‘Output of durable consumer goods and investment goods were both strong, which is certainly positive for growth,’ said Carmela Pace of MPS Finance.

‘The strengthening of the euro doesn’t seem to have had an impact as we can see by the performance of investment goods output.’

Production of investment goods, mostly machinery and machine components, rose 2.4 percent, rebounding after a steep drop in April.

Before May’s recovery, Italian industrial output had fallen in three of the previous four months, raising some doubts over the strength of the economic recovery in the euro zone’s third largest economy.

‘Today’s outcome confirms that the loss of industrial momentum was only temporary, and due mainly to an unfavourable calendar effect as well as higher than desired inventories at the start of the year,’ said Unicredit MIB economist Chiara Corsa.

‘Solid business surveys point to further strengthening in industrial output going forward, underpinning a nice GDP acceleration in the second half of the year.’

Output rose 0.9 percent year-on-year in work-day adjusted terms in May, after an upwardly revised 1.0 percent increase in April.

Output in the first quarter was revised up to a drop of 0.8 percent over the previous quarter from a drop of 0.9 percent.

The first quarter output fall was partly responsible for the sharp slowdown in economic growth, which was just 0.2 percent, after a surge of 1.1 percent at the end of last year.

Most analysts expect a modest rebound in both industrial output and gross domestic product in the second half of the year.

Last month Romano Prodi’s centre-left government issued a 4-year economic plan which targeted growth at 2.0 percent this year and 1.9 percent in 2008, maintaining a steady pace after the 1.9 percent rate last year which was the best result since 2000.

In the first five months of the year industrial output was up a work-day adjusted 0.9 percent from the same period of 2006.

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