Italian industrial production rises in March, euro area industrial production likely fell in Q1

Italy’s latest industrial production data for March was released today. Earlier in the week, the equivalent data for France showed a decline in March. However, German and Spanish production rebounded. The Italian data also came in stronger after two straight falls at the beginning of the year. Industrial output rose 1.2 percent sequentially to leave the annual rate rising from a ten-month low of 2.8 percent year-on-year to 3.6 percent year-on-year, an encouraging rate widely matching its average last year.

However, in the first quarter as a whole Italian output came in flat on a sequentially basis. The deceleration in growth was in line with the latest business survey indicators, which softened considerably in the first quarter. And at the beginning of the second quarter, those surveys continued to be in line with a loss of momentum: the manufacturing PMI and ISTAT manufacturing confidence indicators fell to the lowest levels in fifteen and eleven months respectively, with anecdotal evidence indicating towards supply-side constraints and softer demand as key factors behind the deceleration, noted Daiwa Capital Market Research in a report.

In the meantime, the data from the largest euro area member states seem to be in line with a rise of over 0.4 percent sequentially in March, which should almost reverse the 0.8 percent fall in the prior month.

“Nevertheless, on a quarterly basis, output almost surely fell in Q1, most likely by around 0.5 percent 3M/3M, contributing to the moderation in GDP growth from 0.7 percent Q/Q to 0.4 percent Q/Q”, added Daiwa Capital Market Research.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Euro was bullish at 76.5162, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 2.62384. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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