Italian industrial output rises unexpectedly

According to Istat data, seasonally adjusted Italian industrial production expanded by 0.1% MoM in July, after a surprisingly strong +1.1% MoM in June. The WDA measure was up 4.4% year on year (from 5.3% YoY in June), showing that the industrial recovery is still at a healthy pace.

The aggregate breakdown shows the production of investment goods (+1.6% MoM), consumer goods (+0.5% MoM) and intermediate goods (+0.3% MoM) were all growing, while energy production contracted (-3.6% MoM).

Within the manufacturing domain, the production of machinery and plants turned out to be the fastest growing sector in WDA YoY terms (+8% YoY), overtaking transport equipment (+6.9% YoY) and food (+6.9%). The sectors' part of the construction chain were also back to positive growth.

The statistical carryover for 3Q17 industrial production should now be at 1.1%, the same pace of quarterly production growth recorded in 2Q17. Taking into account the upbeat state of business and consumer confidence in July and August, this bodes well for a continuation of a sound GDP expansion in 3Q17. We are currently anticipating a 0.4% QoQ GDP growth in 3Q, with upside risks.