Italy’s industrial production sinks deeper than expected in May

Industrial production in Italy during the month of May sank deeper than the markets had expected, making conditions worse for Prime Minister Matteo Renzi to put the economy on a stable footing, especially after the Brexit vote that shook production and consumption, besides possibilities of a further global breakdown.

Output decreased 0.6 percent from April, when it rose a revised 0.4 percent, data released by the national statistics office Istat showed Monday. The median estimate of 16 analysts surveyed by Bloomberg News called for growth of 0.1 percent in May. On an annual basis, work day-adjusted basis industrial production also fell 0.6 percent.

Moreover, gross domestic product rose 0.3 percent during the three months ended March, compared to the previous quarter, but Istat last week said the growth is expected to slow down in the near term, as per its composite forward-looking indicator.

In contrast, the International Monetary Fund has also released its estimates for the Italian gross domestic product, which is likely to showcase an expansion of 1.1 percent this year, trailing most other euro-area nations. Further, a looming Italian bank crisis and the UK’s June 23 vote to leave the European Union will further test Renzi’s efforts to spur growth.

"The repercussions from the UK referendum affect the euro area in a difficult moment," said Bank of Italy Governor Ignazio Visco Friday in a speech in Rome.

Meanwhile, the Italian economy, the third-biggest in the 19-nation euro region, returned to growth last year, emerging from its longest recession since World War II.