Bloomberg News

Italian Industrial Output Unexpectedly Rises Even Amid Cuts

February 12, 2012

(Updates with quarterly data in third paragraph, comment from economist in fourth.)

Feb. 10 (Bloomberg) -- Italian industrial production unexpectedly rose in December, even as quarterly data suggest that the euro’s area’s third-biggest economy may have entered its second recession since 2009 amid tax hikes and budget cuts.

Output increased 1.4 percent from November, when it rose 0.3 percent, national statistics office Istat said today in Rome. Economists had expected a 0.5 percent drop, the median of 21 estimates in a Bloomberg News survey showed. Production fell 1.7 percent from a year earlier on a workday-adjusted basis.

Output declined 2.1 percent in the three months through December from the previous quarter, suggesting Italy’s economy may have contracted in the fourth quarter after shrinking 0.2 percent in the period from July through September. A recession is commonly defined as two consecutive quarterly contractions. Istat publishes fourth-quarter gross domestic product figures on Feb. 15.

“What these numbers suggest is that the GDP contraction in the fourth quarter may not be quite as deep” as some forecasts suggest, Vladimir Pillonca, an economist at Societe Generale SA in London, said in an e-mail. “Italy’s recession has barely started and has yet to reach its most acute phase,” he said, adding that he predicts GDP will decline as much as 0.4 percent in the three months through December.

Recession Forecasts

Mario Monti, the unelected premier who took over after Silvio Berlusconi’s resignation in November, pushed through 20 billion euros ($26.5 billion) in spending cuts and tax increases in December while reducing red tape that he blames for Italy’s stagnant economy. Italian GDP rose at an annual average of 0.4 percent in the decade through 2010, compared with 1.2 percent in the euro area.

Italy’s government projects GDP to fall 0.5 percent this year while the International Monetary Fund forecasts a contraction of 2.2 percent. Bank of Italy Director General Fabrizio Saccomanni told reporters in Rome yesterday that he expects the economy to shrink as much as 1.5 percent in 2012.

December’s monthly gain was led by computers and electronics, vehicles, wood products and chemicals, Istat said.

Still, Italian business confidence fell in January to the lowest in more than two years. Fiat SpA, Italy’s biggest manufacturer, led a decline in auto sales in Europe in 2011 with a 12 percent slump to 947,786 vehicles, according to the European Automobile Manufacturers’ Association in Brussels. Deliveries in Italy fell 16 percent in January.

French industrial output declined in December by 1.4 percent, Paris-based national statistics institute Insee said today, the latest sign that the region’s second-biggest economy may also be on the verge of a recession.

--With assistance from Giovanni Salzano in Rome. Editors: Jeffrey Donovan, Simone Meier

To contact the reporter on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net


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