Italian factory activity probably took a breather in August

Information gathered over the summer months indicates that Italian industrial production grew modestly in August (+0.2% mom), following the jump recorded in July (+1.1% mom). This ongoing improvement would be fully consistent with the combination of stronger business optimism (as reflected in Istat's confidence gauge, near cyclical highs) and the solid PMI readings witnessed over the past few months. 

Importantly, this gives weight to the expectation that the Italian recovery will continue in both Q3 and Q4 (0.3% qoq on average), as there exists a close link between factory activity and GDP growth.