By Steve Scherer
Aug. 6 (Bloomberg) -- Italian industrial production unexpectedly fell in June as the country struggles to climb out of its worst recession since World War II.
Production declined 1.2 percent from May, when it was unchanged, the national statistics office in Rome said today. Economists had predicted manufacturing would gain 0.5 percent, according to the median of 22 forecasts in a Bloomberg survey. From a year earlier, adjusted production fell 21.9 percent.
“The drop in manufacturing is slowing, but it’s too early to say the recession is over,” said Lucia Lorenzoni, an economist with Banca Monte dei Paschi di Siena SpA in Siena, Italy. “What today’s figure shows is that the recovery is going to be very slow.”
Lorenzoni and two other economists predicted Italy’s economy, Europe’s fourth biggest, contracted more in the second quarter than was forecast before the release of the manufacturing figure. While Italian business confidence rose to an eight-month high in July, and consumer confidence was at its highest in almost two years, demand for industrial goods is still falling, Lorenzoni said.
Indesit SpA, the nation’s biggest maker of household appliances, posted a loss in the second quarter, and it doesn’t see sales picking up soon.
‘Demand Weak’
“Demand is still very weak,” Indesit Chief Executive Officer Marco Milani said when the company released results on July 30.
The report showed that sales of durable goods, such as cars and home appliances, fell 26 percent from a year earlier. Production of vehicles, including cars, buses and trucks, declined 35 percent from a year earlier, Istat said.
Italy’s economy will shrink 5.2 percent this year, twice as much as 2008, according to the government. The euro-region economy “bottomed out” in the first quarter, according to an index produced by the Bank of Italy last month. Some Italian manufacturers are showing signs of recovery.
Carmaker Fiat SpA’s domestic sales of its namesake brand rose 12 percent in July, as overall Italian car registrations rose for a second month, the Transportation Industry said earlier this week. Government incentives to trade in older cars helped boost demand. Fiat is Italy’s biggest manufacturer.
Other countries are showing signs of improvement, which could boost demand for Italian exports. Business confidence in Germany, Europe’s largest economy, rose for a fourth month in July, the Ifo institute said last month. The decline in European manufacturing slowed for a fifth month in July, Markit Economics’ purchasing managers index said on Aug. 3.
ECB
European Central Bank council member Athanasios Orphanides said on July 24 that recent positive signs in the global economy point to a gradual recovery next year.
Italy’s economy likely shrank 0.7 percent in the second quarter from the previous one, according to the median forecast of 22 economists surveyed before the release of today’s data. Three economists changed their forecasts to a 0.8 percent decline after the release. Istat releases that report tomorrow at 10 a.m.
Italian production declined 3.9 percent in the second quarter compared with the previous three months, indicating that economic growth likely slowed for a fifth quarter.
For Related News and Information: Stories on Italy’s economy: TNI ITALY ECO
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