Italy industry output plunges in August as economy struggles

By Antonella Cinelli

ROME (Reuters) -Italian industrial output slumped in August by 2.4% from the month before, data showed on Friday, in a renewed sign of weakness for the country's long-struggling manufacturing sector.

A Reuters survey of 13 analysts had pointed to a 0.4% decrease, after a 0.4% month-on-month rise in July.

August's decline extended to all the main industrial sectors, national statistics agency ISTAT said, driving a 0.6% fall in the June-August period compared to the previous three months.

"It now seems likely that industry acted as a drag on growth over the third quarter, once more leaving the onus for growth on services", said Paolo Pizzoli, senior economist at ING.

"Our current base case forecast for Italian quarterly GDP growth in the fourth quarter is a meagre 0.1%. If anything, today's data adds a downside risk to this call," he added.

On a work day-adjusted year-on-year basis, industrial output plunged 2.7% in August versus a forecast for a 0.5% increase, following a 0.9% rise in July.

Both the month-on-month and year-on-year declines were the steepest since December last year.

Italian think tank Prometeia said August's data did not necessarily derail some recent signs of recovery in the country's industrial sector, adding, however, that it increased uncertainty.

Both ING and Prometeia pointed out that industrial output data can be particularly volatile and less reliable in August, when many factories are closed.

In a further sign of weakness, last week a purchasing managers' survey of the manufacturing sector signalled a return to contraction in September after a fleeting recovery in August.

Gross domestic product in the euro zone's third largest economy shrank by 0.1% in the second quarter from the previous three months, and Giorgia Meloni's government last week marginally lowered its forecast for full-year 2025 growth to 0.5% from an April projection of 0.6%.

(Reporting by Antonella Cinelli, graphic by Stefano Bernabei, editing by Gavin Jones)