Industry, production grows in the second quarter: positive expectations confirmed

Italian industrial production confirms positive expectations and grows in the second quarter (+ 1.1%) with a trend similar to that recorded in the first, despite the strong correction detected by Istat in May (-1.5%) and thanks to the recovery estimated in June (+ 1.3%). This is what emerges from the rapid investigation of the Confindustria Study Center. The cyclical change in activity in the second quarter is + 1.1%, after + 1.2% in the first, and the carryover to the third quarter is + 0.3%. Production, net of the different number of working days, increased in June by 14.7% compared to the same month of 2020. Orders in volume advance in June by 2.3% on the previous month (+ 13.8% on June 2020) and in May by 1.8% compared to April (+ 36.0% annually). The economic indicators relating to the second quarter, notes the Csc, continue to indicate an improvement in the economic context. The fall in activity in May, largely explained by a base effect (after the strong rebound in April), does not change the current trend. Domestic demand is expected to accelerate, supported in more recent months also by consumption which, due to the effect of uncertainty and limitations on travel and activities, had languished in recent months. So much so that in the first quarter the household saving rate, according to Istat, had risen further, reaching 17.1% of disposable income, a value more than double the pre-Covid average (8.2%) and second only to 20.1% reached in the spring of 2020. Thus, the Csc notes, both components of demand are providing support to activity in the industry; according to the increases in orders, both domestic and foreign, this contribution will continue also in the summer months. The confidence of manufacturing entrepreneurs in June rose to its highest since the autumn of 2000, supported by a recovery in demand that continues to accelerate, putting pressure on the production capacity of companies. In the last month, the balances of assessments and expectations on production and orders have reached historically high levels while the assessments of entrepreneurs on the economic and employment trend in the short term have improved a lot. Similar information also comes from the manufacturing PMI (IHS-Markit) which in June reached the level of 62.2, close to the historical record reached in May (62.3). Purchasing managers have shown some concerns due to an increase in purchase prices and, in some cases, a shortage of materials, factors that are generating an increase in average delivery times and a reduction in business margins. The services SME reported a strong improvement in June (index at 56.7), with the ‘expectations’ component rising to its maximum since 2010. The outlook is therefore positive, despite growing fears that the ‘Delta variant’ of the virus can slow down the progress made in the fight against the spread of Covid-19. The smooth progress of the vaccination campaign is the main precondition so that a recovery that has been taking place in recent months, but which must be consolidated, is not interrupted in the bud. After the decline in May (-1.5%), Italian industrial production recovered in June. The Confindustria Study Center in its rapid survey, in fact, notes an increase in industrial production of 1.3% in June over May, when Istat reported a decrease of 1.5% over April.