Italy: Industrial Production accelerates strongly

December industrial production came in at 1.6% MoM (0.2% in November) in seasonally adjusted terms, posting the fastest monthly increase in two years. The calendar-adjusted measure, better suited to monitor the trend of production, was up 4.9% YoY (2.3% in November).

The aggregate breakdown shows that the improvement was broad-based, with investment goods (+4.7%) leading over intermediate (+2.6%) and consumer goods (+1.9%) with energy (-1.5% MoM) in negative territory.

Digging into sector data, we note that investment-related machinery and equipment (+15.6% YoY) and manufacturing and machinery installation (+12.1% YoY) took the lead over metal products (10.1% YoY) and pharmaceuticals (+9.8% YoY). Interestingly, sectors part of the construction chain, which have been clear laggards in the ongoing recovery so far, have accelerated.

With December data now in the bag, we now know that in 4Q17, SA Italian industrial production expanded 0.8% QoQ (1.6% in 3Q17). In combination with positive developments in the PMI and confidence data over the quarter, this reinforces our forecast for 0.4% QoQ GDP growth in 4Q17.