Italy: Flirting with technical recession – ING

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Paolo Pizzoli, senior economist at ING, notes that the Italy’s seasonally-adjusted industrial production measure contracted by 1.6% month-on-month (from a downwardly revised -0.1% MoM in October).

Key Quotes

“The working day-adjusted YoY reading, better suited to monitor the trend, was also sharply down to -2.6% (from +1% in October), the lowest reading since October 2014. Production contracted by 2-4% MoM in intermediate goods, 1.7% MoM in investment goods and 0.9% in consumer goods. Only energy production managed to post a 1% MoM increase.”

“The November production reading adds serious doubt about GDP growth over 4Q18. Over the Sep-Nov quarter, industry data on a seasonally-adjusted basis, contracted 0.1% QoQ and confidence data has deteriorated further overall.”

“On past form, both the ESI and our computed PMI composite measure for Italy for 4Q18 are consistent with a contraction of Italian GDP in 4Q18. We are now pencilling in a second consecutive 0.1% QoQ GDP contraction in 4Q18, which would mark the start of a technical recession.”