Industrial production stops but prospects remain good

The rise in industrial production stops in August (.0.2%) and September (.0.3%) even if prospects remain positive. The Italian industrial production grew in the third quarter of 2021, according to the findings of the companies interviewed by the Csc (Confindustria Study Center), by 0.5% quarterly, or a physiologically more contained rate than observed in the first two (when it had increased by + 1.2% and + 1.5% quarterly respectively).

The quarter would have closed down: in August there was a reduction in activity of 0.2% (after the increase of 0.8% recorded by Istat in July), followed by a further decrease of 0.3 % in September explained by a greater use of inventories, by possible supply bottlenecks along the international production chain due to the scarcity of some components and raw materials and by the production slowdown of the main commercial partners in the 2nd quarter of 2021.

The seasonally adjusted volume orders, the Csc survey continues, would have increased in August by 1.1% on the previous month (+ 0.7% on August 2020) and in September by 0.7% on August (+14, 1% per annum). The economic indicators relating to the third quarter continued to point to an expansive dynamic of activity in the industry, but slightly attenuating: the confidence of manufacturing companies and services in August and September worsened, due to the slowdown in judgments and expectations on production levels, and on orders (still very expansive), due to the foreign channel.


Although the degree of plant utilization by manufacturing companies in the 2nd quarter reached the highest value since December 2018 (77.4%), the scarcity of manpower and the insufficiency of materials were perceived as factors of increasing obstacle to production. The September PMI manufacturing index maintained an expansive profile for the 15th consecutive month, but less than in August. In quarterly terms, the average of the 3rd was 2.3% lower than that of the 2nd.

According to IHS.Markit sample firms, disruptions on the distribution chain negatively impacted which led to a further lengthening of the average delivery times and an increase in backlog. Another element that could have had a negative impact in September, and could have some unfavorable effects in the months to come, is the moderation of the economic activity of business partners: German production in the 2nd quarter fell by 1.0% on a quarterly basis, the French one by 0.9%.

On the other hand, expectations on the economic trend in the next three months have improved a lot, demand remained strong as evidenced not only by the high historical data of the assessments on orders, but also by the fifth consecutive month of negative assessment on inventories. The uncertainty about the possible economic repercussions of any tightening of administrative restrictions due to the pandemic has been greatly attenuated thanks to the coverage percentages achieved by vaccinations. The outlook therefore remains positive.

By Editor

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