Italian industrial production unexpectedly rose in May after declining more than originally reported in the previous month.
Output gained 0.8 percent from April, when it dropped a revised 2 percent, national statistics office Istat said in Rome today. Economists forecast a decline of 0.6 percent, according to the median of 20 estimates in a Bloomberg News survey. Production fell 6.9 percent from a year ago on a workday-adjusted basis.
“We doubt that the May outcome represents a new spring for Italy’s activity sector,” Fabio Fois, an economist at Barclays Capital in London, wrote in a note. “Domestic demand remains weak, with no sign of recovery,” and “Italy is likely to experience negative quarterly rates of growth until first quarter of next year,” he said.
The economy entered its fourth recession since 2001 in the fourth quarter and will likely contract 2.4 percent in 2012, employers’ lobby Confindustria said last month. Prime Minister Mario Monti is implementing austerity measures passed last December aimed at containing the country’s financing costs and public debt, Europe’s second-biggest. His Cabinet also approved last week 26 billion euros ($32 billion) of spending cuts over the next three years.
The gain in May production comes amid signs that producers think the worst may be over for manufacturing. Italian business confidence unexpectedly rose last month from the lowest level in almost three years. The manufacturing-sentiment index rose to 88.9, from a revised 86.6 in May, the lowest since August 2009, Istat said June 27.
The slumping economy in Italy and Europe is hitting the country’s biggest manufacturer, Fiat SpA. (F) Production of vehicles, including cars and busses, fell 21 percent in May compared with a year earlier, Istat said.
Fiat Chief Executive Officer Sergio Marchionne said on July 3 that he may close a second Italian factory as European auto deliveries sink for a fifth straight year. Fiat closed a plant in Sicily last year and will shut another one unless it can come up with a viable plan to use excess capacity in Italy to build cars for North America, Marchionne said.
Istat originally reported a 1.9 percent output drop in April.
To contact the reporter on this story: Lorenzo Totaro in Rome at firstname.lastname@example.org;
To contact the editor responsible for this story: Craig Stirling at email@example.com