Italy December industry output posts steepest monthly drop since Jan. 2018

ROME, (Reuters) – Italian industrial output was much weaker than expected in December, falling 2.7% from the month before to post its steepest decline for almost two years, data showed on Monday.

December’s plunge in output, the largest drop since January 2018, was the third in the last four months and suggests Italy’s long-running manufacturing slump may be deepening.

A Reuters survey of 10 analysts had pointed to a 0.5% fall, with no forecasts below -1.0%.

November’s data was revised down slightly to show a flat reading, originally reported as 0.1%.

In the fourth quarter, output in the euro zone’s third largest economy was down 1.4% compared with the previous three months, national statistics bureau ISTAT reported.

That followed a 0.8% fall in the third quarter and was the steepest drop since the fourth quarter of 2012.

Over the whole of 2019 industrial output, adjusted for the number of days worked, was down 1.3% from the year before, reflecting the persistent difficulties of Italy’s manufacturing sector.

The 2019 decline followed a 0.6% rise in 2018 and was the first annual drop since 2014.

Industrial output was weak across the board in December, ISTAT said, with output of consumer goods, investment goods, intermediate goods and energy products all down more than 2% from the month before.

On a work-day adjusted year-on-year basis, output in December was down 4.3%, following a 0.8% fall in November. That was revised down from an originally reported -0.6%.

The 4.3% year-on-year drop in December was the steepest since December 2018.

Italy’s economy contracted by a preliminary 0.3% in the fourth quarter from the previous three months, ISTAT reported last month, raising the risk that the stagnation of the previous seven quarters could become a recession.

Italian industrial output fell by around a quarter during a steep double dip recession between 2008 and 2013, and has regained only a small part of that during a modest recovery in the subsequent years.

(Gavin Jones, Rome newsroom +39 06 8522 4350, fax +39 06 854 0568 rome.newsroom@news.reuters.com)