14 May 2003, 15:13  Italy industry output down in March, outlook bleak

ROME, May 14 - Italian industrial output posted its fourth consecutive fall in March, slipping 0.4 percent from February and a bigger-than-expected 1.6 percent from a year ago, official statistics agency Istat said on Wednesday. Analysts polled by were expecting the adjusted index to slide a mean 0.4 percent month-on-month and fall 1.1 percent in annual terms. "The end of the Iraq war and the fall in oil prices haven't really impacted on the March data. We'll need to wait until April to see an improvement," said Susana Garcia, an economist at Deutsche Bank.
Istat's data breakdown showed that the car and transport sector was one of the hardest hit in March, with production slumping 8.6 percent from a year ago. The decline in Italy contrasts with an unexpected rise of 0.6 percent in French manufacturing output -- excluding energy, agri-food businesses and construction -- in March as the auto and semi-finished goods sectors held strong. In Germany, however, industrial output slid a greater than expected 1.1 percent in March.
However, recent forward-looking Italian indicators do not suggest much light on the horizon for manufacturers in the euro zone's third-largest economy. Purchasing Managers' Indices (PMI) for April showed Italy's manufacturing sector posted its first contraction in 15 months, while the services sector shrank for the first time since November 2001. "It's difficult to believe that there will be a rapid turnaround of this trend," said Andrea Brasili, an economist at UBM. Analysts say increasingly limp industrial output along with anaemic consumer demand are sapping Italian growth. Istat releases preliminary first-quarter GDP data on Thursday, with the market expecting it to be flat quarter on quarter and up a mean 1.0 percent from a year ago. Last weekend Prime Minister Silvio Berlusconi acknowledged the economic stagnation, warning growth would be below one percent in 2003, despite an official 1.1 percent Treasury forecast//

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