Italian Manufacturing Rises First Time in 5 Months
Jun 14, 2004
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Industrial production in Italy, Europe's fourth-biggest economy, rose for the first time in 5 months in April after a pickup in consumer demand aided manufacturers of cars and appliances.

Output at Italian factories, utilities and mines increased 0.5 percent after declining a revised 0.3 percent in March. The increase was more than twice the 0.2 percent median predicted by 25 economists surveyed by Bloomberg News.

Spending by Italian consumers, which accounts for almost two thirds of Italy's gross domestic product, helped the country return to growth in the first quarter. Merloni Elettrodomestici SpA, Europe's third-largest maker of home appliances, and Fiat SpA, the country's biggest manufacturer, are among the Italian companies benefiting from higher demand.

"Producers are responding to improved consumer demand, the missing link in the recovery," said Pasquale Diana, an economist at J.P. Morgan Chase & Co. in London.

Production of consumer goods gained 1.5 percent from March on a seasonally adjusted basis, the report said, with a 1.1-percent increase in durable goods such as cars and kitchen appliances. Intermediate goods, which are used by manufacturers to produce other goods, gained 2.8 percent in the month.

The production report is the second in a week to show demand recovering for manufactured goods. Italy's economy expanded 0.4 percent in the first quarter after spending on durable goods including cars rose 0.8 percent in the same period, Istat reported. A slump in consumer spending had led growth to stall in the fourth quarter.

Bonds declined after the report with the yield on Italy's 4 1/4 percent bond due 2014 rising 1 basis point to 4.61 percent. A basis point is 0.01 percentage point.
Italian appliance maker Merloni said last month first-quarter profit rose 5 percent, led by sales of its washing machines and dishwashers. Fiat's car sales in April jumped 15 percent, according to a report the Italian Transport Ministry last month.

A rebound in Italian manufacturing would match gains among the country's biggest trading partners. Industrial production in Germany, Europe's largest economy, increased for the first month in three in April, rising 2.2 percent from March. French manufacturing output rose 0.4 percent in the month. (Bloomberg)

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