Italian Industrial Output Falls as Slump Shows no Sign of Easing

Italian industrial production fell more than economists expected in March, indicating there is little sign the country’s longest recession in two decades is easing.

Output decreased 0.8 percent from February, when it fell a revised 0.9 percent, national statistics office Istat said in Rome today. Economists forecast a monthly decline in March of 0.3 percent, according to the median of 13 estimates in a Bloomberg survey.

The euro region’s third largest economy is probably in its eighth quarter of contraction and the slump isn’t likely to ease until late this year or in early 2014, Finance Minister Fabrizio Saccomanni said in an interview with La 7 television last night. The new government of Prime Minister Enrico Letta plans a series of tax cuts and other stimulus measures as it tries to stem the rise in unemployment and a slump in consumer spending.

The economy probably shrank “less sharply” in the first quarter than in the previous three months, the Bank of Italy said in an April 17 report. Consumer confidence unexpectedly rose last month as the political paralysis that left Italy without a new cabinet after inconclusive elections in February ended with the installation of Letta’s coalition government.

Employers lobby Confindustria forecast production increased last month by 0.2 percent, according to a report published yesterday. Industrial output fell 0.4 percent in the first quarter from the previous three months, signaling the economy probably contracted in the period. The statistic institute will report first quarter gross domestic product on May 15.

Letta, whose government was sworn in on April 28, pledged a series of tax cuts to boost growth and create jobs. Economists estimate the measures will lead to more than 10 billion euros ($13 billion) in lost revenue in 2013. Saccomanni said last night that the government would not have to make additional budget cuts this year to cover the lost revenue.

In an effort to help the economy recover, former Prime Minister Mario Monti’s government approved last month a plan to make 40 billion euros in arrears payments to private companies in the next two years. On May 8 state lender Cassa Depositi e Prestiti Spa said it received more than 1,500 requests for advances on the arrears totaling 6 billion euros.

Output fell an annual 5.2 percent on a workday-adjusted basis, Istat said. Istat originally reported a 0.8 percent fall of production for February.)

-- With assistance from Giovanni Salzano in Rome. Editors: Andrew Davis, Dan Liefgreen

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