Italy Feb output at 8-month high
MILAN: Italian industrial output hit an eight-month high in February,
beating market expectations, but economists said internal demand still
remained the weak link.
National statistics institute ISTAT said industrial production rose a
provisional 1.5 percent month-on-month on an adjusted basis in February, the
highest rise since June 1999. Analysts polled by Reuters had expected a rise
of 1.2 percent.
On an unadjusted basis, production rose 7.7 percent year-on-year in February
after a rise of 4.1 percent in January. Adjusted output in January had
fallen 1.1 percent on a month-on-month basis.
"Italy is joining the European recovery," Lorenzo Stanca, head of research
at UniCredito Italiano in Milan told Reuters Television.
"But as long as foreign demand remains the motor, we cannot talk of a
healthy recovery for Italy. In Italy, as in Germany, the problem is still
the weakness of domestic demand."
Ken Wattret, Senior Economist at BNP-Paribas in London, said 1999 had been
disappointing for Italy but the economy was now gathering speed.
"The manufacturing sector is positive, as we saw in the Reuters/ADACI
purchasing managers' index, which rose to the highest level in March since
the index began. These data indicate an acceleration in the first two
quarters of this year," he said.
But he added that despite economic confidence, "consumption is still
uncertain", adding that a tight labour market which put the brakes on jobs
growth was weighing on consumption.
Luigi Buttiglione, an economist at Deutsche Bank, said lower fiscal pressure
expected in 2000 should help stimulate demand.
"Without a recovery in consumption, Italy will remain in last place among
the five major European countries," Wattret said. (Reuters)
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