Italy Production Declines, Adding To Doubts on Pace of Recovery

  • February industrial output falls 0.6%, most since June 2015
  • Renzi's government cut its target for GDP growth this year

Italian industrial production fell in February, reflecting concerns about the pace of recovery that prompted the government to cut this year’s growth outlook.

Output declined 0.6 percent from January, which registered a 1.7 percent revised jump, national statistics bureau Istat said in a report issued Monday in Rome. The median of 15 estimates in a Bloomberg survey called for a 0.9 percent drop in the February. On an annual, work-day-adjusted basis, production increased 1.2 percent, Istat said.

The output’s monthly decline in February was the biggest since June 2015 when production decreased 1 percent.

The government led by Prime Minister Matteo Renzi last week cut its forecast for economic growth this year and next amid a weaker dynamic of global demand and consumer prices. It said it targets a gross-domestic-product rise of 1.2 percent in 2016 and 1.4 percent in 2017, down from previous projections of 1.6 percent for both years.

Last year’s economic expansion likely continued in the first quarter of 2016 amid “a stability of consumer growth as well as the first signs of a recovery of investments,” Istat said in an April 5 report.

The country’s unemployment rose in February as a discount on social contributions for businesses hiring more workers on a long-term basis was being phased out, stripping job creation of a key boost. The jobless rate increased to 11.7 percent from a revised 11.6 percent in January. That compares with a high of 12.8 percent at the start of 2014, but it is still almost twice the rate it was in mid-2007.

Istat originally reported a 1.9 percent increase in January industrial production.