Italy industry output slumps in January after three straight rises

ROME: Italian industrial output fell much more than expected in January after three straight monthly rises, data showed on Monday, getting the new year off to an uncertain start.

Output dropped 1.9 percent in January from the month before, national statistics bureau ISTAT reported, a far steeper decline than the 0.7 percent contraction foreseen by a Reuters survey of 13 analysts.

However, December's data was revised up to show a 2.1 percent month-on-month jump, previously reported at +1.6 percent, and output in January was still up a healthy 4.0 percent in year-on-year terms.

Moreover, in the three months to January, output was up 1.0 percent from the August-to-October period, ISTAT reported, suggesting January's data may be a monthly blip rather than the start of a significant slowdown in Italy's economy.  Italian industrial production often shows a correlation with trends in gross domestic product (GDP), which rose 0.3 percent in the final quarter of last year, slowing from a 0.4 percent increase in the third quarter.  Industrial output fell by around a quarter during a steep double dip recession between 2008 and 2014, and has recovered only a small part of that during the last three years.

Gross domestic product increased 1.5 last year and the caretaker government of Prime Minister Paolo Gentiloni forecasts the same growth rate for 2018, leaving Italy in its customary position among the most sluggish economies in the euro zone.

Gentiloni's Democratic Party slumped badly in elections on March 4, and it says it will go into opposition when a new government has been formed at the end of an ongoing process of negotiations among parties to assemble a ruling coalition.  Industrial output was weak in most sectors in January and was dragged down by steep declines in output of durable consumer goods, investment products and energy products.

ISTAT re-based its industrial production index in January to 2015 instead of 2010, and this process involved significant revisions to the data of previous months.