Italy's production figures provide reassurance over growth

Industrial production in Italy rose 0.6 per cent in February, offering comfort that the eurozone's third-largest economy would this year emerge from three years of recession.

The increase in factory activity marks a rebound compared with a 0.7 per cent decline in January that had raised concerns about the ability of Italy's manufacturing sector to help drive the recovery.

The government of Matteo Renzi, Italy's prime minister, is forecasting that Italy will return to growth this year of 0.7 per cent - and that the pace of the gross domestic product expansion will accelerate further in 2016.

If such a revival, albeit a modest one, were to happen, it would help shore up the country's strained public finances, and could lead to a drop in Italy's high debt to gross domestic product ratio of more than 130 per cent.

While business and consumer confidence surveys have posted encouraging gains in recent months, offering hope of such an upswing, so-called hard economic data have been less conclusive. For example, Italy's unemployment rate actually inched up in February to 12.7 per cent.

But Monday's industrial production figures will provide some reassurance that Italy is set to experience growth this year after six years of stagnation and recession.

Most economists attribute the country's putative recovery to external factors, from cheaper energy prices that are helping consumption to the European Central Bank's new bond-buying programme, which has weakened the euro for the benefit of exporters and is also keeping borrowing costs low.

The 0.6 per cent increase in industrial production in February was the largest jump since last June. Compared with the same period last year, however, industrial production slid by 0.2 per cent in February.

According to Italy's statistical agency Istat, which released the data, the sectors posting the largest growth in industrial production in February compared with the previous year were transportation, refined petroleum products and pharmaceuticals. Extractive industries, textiles and metal products experienced the largest declines.

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