A Few Encouraging Signs in Italy's Lackluster Economy

After last week's release of a strong rise of almost 2% in industrial production in April, Italy released more positive data today. Industrial turnover or sales rose 2.3% in April from March and were 1.5% above April, 2004. Industrial orders rose 1.5% and 2.5% respectively in the comparable periods. The sales and order data are broken down into domestic and foreign. While the rise in domestic industrial sales was stronger than that for foreign sales, orders for foreign sales increased more than those for domestic sales.

While the sales and order data for April are encouraging, the first chart showing sales and orders over the past five years, puts these recent improvements in perspective. They appear to be little more than part of an erratic but only slightly upward trend that began in early 2003.

In addition to the sales and orders data, there were also positive data in the employment situation. Employment rose 0.5% in the first quarter of 2005l and was 1.0% above the first quarter of 2004. At the same time unemployment declined 1.0% in the first quarter of 2004 and was 3.3% below the year ago figure. Italy's harmonized rate of unemployment was 7.9% in the first quarter of 2905. As the attached chart shows, Italy's unemployment rate has continued to decline while that for the Euro Zone as a whole has been rising--mainly as a result of the increasing unemployment in France and Germany.