After March elections and the slow process of forming a government, the Italian economy is showing signs of weakness. A slowdown in February’s producer price index and industrial production month-to-month of 0.30% and -0.50% (prior: 0.80% and -1.80%) underline a decline in manufacturing morale, due to current political uncertainty. A major laggard is consumer goods (-2.40%; prior: +0.10%), but energy turned positive (+8.10%; prior: -6.90%). March manufacturing and economic confidence are lower at 109.1 and 106 (prior: 110.4 and 108.5), a pessimistic view on growth.
However, seen broadly, Italy’s economy remains stable, with an unemployment at a six-year low (10.90% in February), inflation accelerating (March’s consumer price index year-to-year +1.10%) and improving consumer confidence (117.50 as of March 2018, its highest since 31 January 2016). This supports our positive view of the Eurozone. Gaining 0.85% this week, EUR/USD bullishness started last Friday continues, bouncing from a 1.2215 low and heading to the 1.2390 range in the short-term (200-day moving average: 1.1963).
By Vincent Mivelaz
