Italy's out­put plunges, sig­nal­ing slow­down

The Pak Banker - - MARKETS/SPORTS -

Ital­ian in­dus­trial pro­duc­tion un­ex­pect­edly plunged in De­cem­ber, sig­nal­ing that the re­cov­ery in the euro re­gion's third-big­gest econ­omy prob­a­bly slowed in the last quar­ter of 2015 and might strug­gle to con­tinue in com­ing months.

Out­put fell 0.7 per­cent from Novem­ber, which reg­is­tered a 0.5 per­cent drop, na­tional sta­tis­tics bureau Is­tat said in a re­port is­sued Wed­nes­day in Rome. The me­dian of 19 es­ti­mates in a Bloomberg sur­vey called for a 0.3 per­cent in­crease in the last month of 2015. On an an­nual, work-day-ad­justed ba­sis, pro­duc­tion de­clined 1 per­cent, Is­tat said.

Ital­ian busi­nesses grew pes­simistic about the eco­nomic out­look for the econ­omy af­ter gross do­mes­tic prod­uct ex­panded in 2015 at a pro­gres­sively slower pace. The man­u­fac­tur­ing-sen­ti­ment in­dex dropped in Jan­uary as com­pa­nies re­mained cau­tious about the coun­try's abil­ity to main­tain a re­cov­ery this year. In 2015 the lim­ited eco­nomic growth was sup­ported by a re­vival in con­sump­tion amid im­prove­ment in the la­bor mar­ket.

The out­put re­port "high­lights a widen­ing gap be­tween ex­pec­ta­tions and ac­tual data that needs to be mon­i­tored care­fully in com­ing months," Loredana Fed­erico, an econ­o­mist at Uni­Credit Bank AG in Mi­lan, said in a tele­phone in­ter­view. "More­over, the tur­bu­lence on fi­nan­cial mar­kets at the start of the year might now re­flect neg­a­tively on busi­ness sen­ti­ment and in­vest­ments." Com­pa­nies' ex­ec­u­tives have less con­fi­dence in the growth out­look, as "the un­cer­tainty about the pace of re­cov­ery in man­u­fac­tur­ing is ex­pected to con­tinue in the next few months" amid a slow­down in emerg­ing economies, Is­tat sta­tis­tics bureau Is­tat said in a Feb. 5 re­port.

In­dus­trial out­put recorded in the three months through De­cem­ber a 0.1 per­cent fall com­pared with the pre­vi­ous three months, af­ter in­creas­ing in each of the ear­lier four quar­ters. Is­tat will re­lease Italy's GDP re­port for the fourth quar­ter on Fri­day. As the short-term out­look for house­holds and com­pa­nies is seen "evolv­ing in dif­fer­ent ways," un­cer­tainty about the man­u­fac­tur­ing ac­tiv­ity is ex­pected to con­tinue in the next few months, Is­tat said in its monthly re­port on the coun­try's eco­nomic trends.

To ad­just to flag­ging growth in China, Italy's big­gest man­u­fac­turer Fiat Chrysler Au­to­mo­biles NV is de­lay­ing the launch of some mod­els at its Alfa Romeo and Maserati units. Fall­ing sales in Brazil have pushed last month Chief Ex­ec­u­tive Of­fi­cer Ser­gio Mar­chionne to re­view the group's busi­ness plan.

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