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Economy in Brief

January IP Drops but the Pace of Decline Slows
by Robert Brusca March 18, 2009

Italy’s industrial production (IP) dropped again in January but the decline was puny in comparison with the recent string of monthly disasters. This month’s drop of 0.2% keeps the string of declines alive but, ironically, gives some room for hope to come alive that these declines will not go on forever.

The declines in the quarter–to-date are still quite severe – despite the small drop in January. That’s because the level of industrial activity at the end of the quarter in Q4-2008 is so low that the first month of 2009 leaves the early quarter reading at a very low level compared to the Q4 2008 average level.

All the main sectors industrial sectors have been showing strong declines. Italy’s GDP has been dropping and its neighbors in the Euro Area are experiencing continuing weakness. It is far too early to treat the smaller IP decline in Italy as the beginning of good news on the industrial front. The news is welcome but the good news is the first such news and appears totally out of context and so far without support elsewhere. Generally this is not the sector where you expect to see good new appear first.

Italy IP Excluding Construction
Saar except m/m Jan-09 Dec-08 Nov-08 3-mo 6-mo 12-mo Quarter-to-date
IP-MFG -0.2% -2.7% -3.2% -21.9% -20.7% -14.6% -17.2%
Consumer Goods -1.7% -0.9% 0.4% -8.5% -8.4% -8.2% -12.3%
Capital Goods 0.5% -3.5% -2.9% -21.3% -19.5% -15.0% -15.9%
Intermediate Goods -2.0% -4.7% -3.5% -33.9% -30.9% -21.8% -32.2%
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