Italian industrial production rose 0.7% month-on-month in July, according to new analysis from Prometeia, suggesting the slowdown recorded over the previous two months was only temporary rather than the start of a deeper downturn.
Prometeia’s research notes that production is now returning to its underlying trend, one characterised by weak but still positive momentum. Output had been running at relatively high levels at the start of the year, a level beyond what the broader economic outlook would typically justify, largely driven by fears of supply chain disruption. The subsequent falls in May and June, which totalled -1.3% cumulatively, are therefore read by Prometeia as a natural rebalancing after months of elevated activity, rather than evidence of a fresh period of weakness. July’s rebound, the firm argues, confirms that no such downturn had in fact begun.
However, Prometeia is cautious about framing the July figures as a genuine acceleration. Instead, the data point to production settling back into its longer-term pattern, one still constrained by a structurally weak environment. The Italian industrial sector continues to contend with long-standing competitiveness issues and soft European demand, further complicated by ongoing geopolitical uncertainty.
Looking ahead, Prometeia expects the outlook to remain mixed. Business confidence is trending distinctly favourably and could support stronger production growth in the coming months. Order expectations, though, have started to decline again after an earlier improvement, a sign that demand remains fragile and could limit industry’s capacity to accelerate further.
Prometeia’s weekly WEIP indicator also points to encouraging signs for the third quarter. The gauge posted growth for a second consecutive month in August, indicating that economic activity held up reasonably well even as the summer progressed.
On Prometeia’s own forecasts, though, the third quarter looks set to be one of standstill for Italian industry. Following an estimated slight decline of -0.2% in August, which Prometeia characterises as effective stagnation rather than a genuine contraction, activity is expected to remain broadly flat between September and October, at +0.1% and -0.1% respectively.
Averaged across the third quarter, this would represent a -0.1% decline, only partially offsetting the +0.4% growth recorded in the second quarter. Prometeia flags that August and September figures are frequently subject to reporting issues and should be treated with some caution, given the high but typically temporary volatility they can exhibit.
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