Italy, Greek industry in August

Italian industrial output unexpectedly rose in August, offering some hope that recession may be easing slightly although the statistics bureau cautioned that seasonal factors may have distorted the data. Output rose 1.7 per cent month-on-month after an upwardly revised 0.1 per cent fall in July. The figure beat all forecasts in a Reuters poll that had spanned -1.4 per cent and “1.6 per cent and averaged -0.4 per cent. August output data in Italy can be highly erratic because many factories are closed for the summer break, making seasonal adjustment more important and more difficult than in other months, a spokesman for the national statistics office ISTAT said. “It nevertheless shows some positive trends in industry, but we will have to wait for September and October data to see if those trends continue,” the spokesman said. The eurozone’s third-biggest economy has been mired in recession since the middle of last year. It shrank 0.8 per cent in the second quarter of 2012 compared to the first, and shrank 2.6 per cent compared to the same period a year earlier. Unicredit analyst Chiara Corsa said the output data was “undoubtedly strong” even when considering seasonal factors. She said it confirmed her expectation that the pace of recession would ease in the third quarter to about -0.6 per cent. Paolo Mameli from Intesa Sanpaolo said he may revise up his forecast for the economy to contract by 0.7 per cent in the third quarter following the data, though he expected the rise in output in August would be reversed in September. Italy’s economic slump has been accentuated by austerity measures adopted by Mario Monti’s technocrat government when he took office at the end of last year, aimed at heading off a debt crisis. The government said in September it expected the economy would shrink this year by 2.4 per cent, twice as much as the previous projection of a 1.2 per cent drop, made in April. ISTAT has said it expects the economy may contract slightly less than the government forecasts this year, pointing to signs of an improvement in industrial output and confidence in the second half of the year. In August, output rose in the consumer and investment goods sector and in the energy industry, while falling slightly in the intermediate goods sector, on Wednesday’s data showed. The overall rise in Italy’s output mirrored a better than expected 1.5 per cent surge in French industrial output in August, while output in Germany, Europe’s largest economy, fell 0.5 per cent due to a weaker construction sector. Germany, France and Italy make up around two thirds of total eurozone industrial output. Aggregate data for the currency bloc will be released on Friday. On a work-day adjusted year-on-year basis, Italian output in August was down 5.2 per cent, compared to a 7.2 per cent decline in July. Greek industrial output rose in August for the first time since the country’s debt crisis began, led by higher exports, data from statistics agency ELSTAT showed on Wednesday. The indicator rose by 2.5 per cent year-on-year, its first positive reading since April 2008, according to ELSTAT data. Greek exports Economists attributed the rise to Greece’s export industry, which has benefited from falling labour costs as the country has implemented policies laid out under its bailout deal. “Industrial sectors with export orientation, such as pharmaceutical products as well as basic metals and metallic minerals, led the recovery,” said Nick Magginas, an economist at National Bank of Greece. Industry accounts for just 15 per cent of Greece’s economy, meaning a revival in the sector is unlikely on its own to lead to a sustained recovery. The Greek economy is expected to remain in deep recession for a fifth consecutive year in 2012, fuelled by austerity policies as part of the country’s EU/IMF bailout. The Greek government expects GDP to shrink by 6.5 per cent this year after a 7.1 per cent contraction in 2011. Industry accounts for about 15 per cent of the output of Greece’s service-oriented economy, with manufacturing making up slightly more than 11 per cent of gross domestic product. From gulftoday