Italian Output Declines Adding To Signs Of Weaker Global Demand

  • Exports from Germany also hit by slower pace in world trade
  • Italian production's fall contrasts with data from France

Italian industrial output fell in August more than economists expected, adding to signs that weakening global trade might make the recovery in the euro region’s third-biggest economy less sustainable.

Production declined 0.5 percent from the previous month, which registered a 1.1 percent rise, national statistics agency Istat said in a report issued Friday. The median of 15 estimates in a Bloomberg survey called for a 0.3 percent fall in August. On an annual, work-day-adjusted basis, production rose 1 percent, Istat said.

In a sign that Europe’s largest economy is also feeling the pain of slower demand from emerging markets, German exports in August slumped the most since the height of the 2009 recession, the Federal Statistics Office in Wiesbaden said Thursday. The Italian production data contrasts with those from neighboring France where industrial production jumped 1.6 percent in August, according to a report by the national statistics office in Paris.

Production in Europe might suffer in coming months from the fallout of Volkswagen AG’s cheating on emissions tests, potentially affecting the carmaker’s suppliers across the region, including in Italy. 

As Italy entered the final quarter of the year, Prime Minister Matteo Renzi is finalizing a budget plan including cuts to real estate taxation aimed at supporting domestic demand amid recent signs of improvements in the labor market.

Last month his government raised Italy’s gross-domestic-product forecasts for 2015 and 2016 to 0.9 percent and 1.6 percent respectively. The county’s economic expansion in the first half “paves the way for further improvements in the rest of 2015, albeit in a less favorable international context than what appeared at the beginning of the year,” Finance Minister Pier Carlo Padoan said in the foreword to the update of the draft budget plan approved by Renzi’s cabinet on Sept. 18.

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