Italian industrial production climbed 0.7% month-on-month in March, beating Prometeia’s own forecast of 0.2% growth and building on the modest 0.2% gain recorded in February, according to its research.
The result is a notable positive surprise given the increasingly difficult backdrop, with escalating Middle East tensions stoking fears over energy supply disruptions and potential fragility across global supply chains.
However, Prometeia cautions against reading too much into the headline figure. The firm notes that a significant portion of the March uptick may reflect precautionary front-loading rather than genuine demand-driven momentum. With tensions in the Middle East raising the prospect of prolonged restrictions on maritime traffic through the Strait of Hormuz, Prometeia suggests a number of firms appear to have accelerated both production schedules and procurement activity in order to buffer against potential future disruptions to their value chains.
If that interpretation holds, Prometeia warns the near-term boost to industrial activity is likely to prove temporary. The firm points out that historically, supply shocks and sharp moves in energy prices tend to filter through to the real economy only after a delay, meaning any sustained negative impact may still lie ahead. Should geopolitical pressures persist, Prometeia believes the current uplift could fade quickly over the coming quarters.
The broader picture for Italian industry, according to Prometeia, remains one of stagnation. Despite back-to-back improvements in February and March, the firm notes that average output for the first quarter came in at -0.2%, consistent with an economy treading water rather than gaining traction. Prometeia finds that production levels continue to oscillate around essentially flat territory, with the balance of risks tilted to the downside for the remainder of the year.
Business surveys for the manufacturing sector have deteriorated in recent weeks, Prometeia observes, reflecting rising geopolitical risk and higher expected energy costs. That said, the firm notes the decline remains contained and has not spread uniformly across all indicators, suggesting companies are adopting a cautious rather than overtly recessionary posture for now.
Looking ahead, Prometeia projects a pullback of 0.8% in April, attributing the expected drop primarily to a confidence effect. The firm then anticipates a modest recovery between May and June, with output rising 0.5% before slipping back 0.2%. Averaged across the second quarter, Prometeia calculates this would translate to marginal growth of 0.1%.
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