ROME--Italian industrial orders dropped in February, as both
foreign and domestic demand slipped, underscoring the fragility of
the economic recovery in the euro-zone's third-largest economy.
Industrial orders declined 3.1% from January, reversing much of
their 4.8% increase in the previous month, national statistics
institute Istat said Friday, using seasonally adjusted data. Orders
are up 2.8% on the year in unadjusted terms, Istat added.
The monthly drop was led by a 4.4% reduction in foreign orders
while domestic demand fell half as much.
Orders are a proxy for future industrial output, a key metric
for Italy, which has Europe's second-largest manufacturing
sector.
Industrial sales declined 1.5% in February from January in
seasonally adjusted terms, with a 1.8% drop in the domestic market,
the first decline in four months, Istat said. Industrial sales are
up 1.2% from February 2013 in workday-adjusted terms, led by a
resurgence in automobile production and sales, according to
Istat.
Monthly orders and sales are volatile, but the latest figures
highlight the risk of a downturn. While Italy's industrial output
has an upward trend over the longer term, it posted a surprise
decline of 0.5% in February from January, Istat reported earlier
this month.
Still, business lobby Confindustria, which uses a proprietary
survey, expects industrial output rose 0.7% in March, enough to
post 0.5% growth in the quarter.
Italy's economy has to expand at around 2.0% in real terms for
the unemployment to begin to decline to pre-crisis levels,
economists say.
As exports are unlikely to produce such a result, Prime Minister
Matteo Renzi's government has approved a new economic plan aiming
to boost domestic demand. It is expected to approve EUR10 billion
in tax cuts later Friday.
-Write to Christopher Emsden at chris.emsden@dowjones.com
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