ITALY DATA: May IP Weaker Than Expected, But 3m/3m Growth Still Positive

Italian industrial production was weaker-than-expected in May, falling 0.7% M/M (vs -0.2% cons, 0.9% prior). It caps off a mixed month for the four largest Eurozone economies, with Spain and Germany seeing stronger growth than expected but Italy and France seeing weaker developments. Despite the disappointing May, 3m/3m Italian IP growth remains positive at 0.7%, up from 0.4% in April and 0.6% in March. 

• While the correlation isn’t perfect, recent IP momentum appears better than implied by the manufacturing PMI/ISTAT surveys. This suggests industry is on track to be a positive contributor to Q2 value added, potentially helping offset weaker trends in the services sector (we wrote last week that the trend in retail sales remains sluggish).
• Note that in June, the manufacturing PMI fell to 48.4 (vs 49.2 prior) while the ISTAT manufacturing confidence indicator rose to 87.3 (vs 86.6 prior).
• In May, there were sequential falls in all major sub-components other than capital goods (0.0% M/M vs 0.6% prior) and energy (0.7% M/M vs -0.5% prior).
• On a 3m/3m basis, consumer goods production has been negative for four consecutive months (driven by nondurables), while capital and intermediate goods production has been positive.
• The level of IP has been broadly flat since 2024, but no longer appears on the downward trend that characterised 2022/2023. Intermediate goods production has seen the weakest development since 2022 – a theme that can also be observed in the Spanish and French IP data.