Italian Industrial Output April 2008

Italian industrial production increased in April, with output rising 0.7 percent on a seasonally and calendar adjusted basis from March, following a 0.1 percent decline in March itself, according to data from the national statistics office in Rome today. Exports rose a surprisingly strong 1.4 percent in the first quarter (according to detailed data also released from ISTAT, full post to follow), and this was the principal driver of the revised 0.5 percent economic growth over the previous quarter.




Production of consumer goods rose 3 percent in April from the previous month and the output of durable goods like refrigerators gained 2.7 percent, according to today's data. Non-durable goods increased 2.9 percent, while output of clothing and textiles rose 2 percent. Food and beverages production surged 3.7 percent.

However if we look at the seasonally adjusted output index (see below) it is clear that production is now well down on the December 2006 peak, even if we can see a slight rebound of the lows which were registered in November and December 2007.

Italy Services PMI May 2008

Euro zone services activity slipped close to contraction in May, in line with expectations, as growth took a sharp hit in France, while inflationary pressures mounted, a key survey showed on Wednesday. The RBS/NTC Eurozone Services Purchasing Managers index fell to 50.6 in May, the same level as the flash estimate and as forecast by economists, from 52.0 in April.

The Italian services sector continued to contract in May (and contracted slightly faster than in April), according to the NTC purchasing managers' index which registered a seasonally adjusted 48.1 in May from 49.8 in April. This is now the sixth consecutive month of contraction.

Italy Manufacturing PMI May 2008

Italy's manufacturing sector contracted for a third straight month in May, putting in its weakest performance for three years, and casting an ever deeper shadow over growth prospects, an NTC/ADACI survey showed on Monday.


The NTC Research Purchasing Managers Index fell to 48.0 from April's 48.2, sinking further below the 50 divide between growth and contraction.

"Prospects don't look good," said Chris Williamson, chief economist at NTC Research which compiles the data. "Particularly worrying is the weak pipeline flow of orders, with outstanding business falling to its lowest for three years."

Euro zone manufacturing activity generally cooled further in May as factory output remained near a three-year low even while edging up slightly from the earlier flash estimate. There is also increasing evidence of a widening divergence between the big four economies in the 15-nation currency bloc with Germany and France continuing to prop-up a contracting Italy and a Spain which is in "free fall". This divergence is only going to add to the headaches over at the European Central Bank, which is already pretty worried about the continuing high inflation.


The RBS/NTC Eurozone Purchasing Managers Index for the manufacturing sector eased to 50.6 in May, down from April's 50.7 but above the earlier flash estimate of 50.5.


The survey underscores the tough task now facing Silvio Berlusconi. Economy Minister Giulio Tremonti has said growth will be "around zero" this year, worsening a trend which has seen Italy underperform most of its European peers for at least a decade.
The PMI survey showed employment levels fell for the fourth month running, new orders dropped for the fifth month running and output fell for the second month running.

"The fall in employment is likely to accelerate and the PMI at this level is consistent with a contraction of the economy," said Williamson, who forecast weak gross domestic product data in the second and third quarters.

Input price inflation accelerated slightly from April and, with an index level of 64.8, remained high by historical standards.

Italian Retail Sales PMI May 2008

The latest reading on the Bloomberg Eurozone Retail Purchasing Managers' Index (PMI) suggests that European retail sales rose in May at the fastest rate since April 2007, and registered the first increase for three months.

The Bloomberg Eurozone PMI, an indicator based on a mid-month survey of economic conditions in the euro area retail sector and providing data one month ahead of government issued figures, registered 53.1 in May, suggesting a significant bounce-back from April's survey low of 41.8. The improvement reflected higher sales of clothing & footwear, food & drink and household goods, commonly attributed to better weather compared to April and to the timing of Easter.


However, despite the pick-up during May, sales have fallen over the first five months of the year on average, suggesting that business conditions in the Eurozone retail sector are generally subdued. Also, due to the very early timing of easter this year, and some very untypical weather, it is hard to interpret the month on month readings. If we add the two readings - April and May - together, and halve the result, we get 47.45, which means on average there was contraction across both months.

In May sales rose in Germany and France but fell in Italy. In fact the data from Italy continue to make decidedly depressing reading since Italian retail sales fell for the fifteenth successive month. Although the rate of decline slowed from April's record pace (the index rose from 31.4 to 38.8), the last three months have seen the three sharpest falls in sales seen over the survey's four-and-a-half year history. Consumers remained reluctant to spend due to squeezed incomes and concerns over the economic and political environment. I think the chart below gives a quite exceptional image of the state of play in terms of domestic consumer demand in Italy. Horrible!