After a second quarter in which Italian industrial production rose at a pace close to that recorded in the first (1.0% vs 1.3%), the third starts with a negative start. According to the Confindustria Study Center, in fact, “in July it is estimated a drop in activity of 0.7%”.
There is a lack of raw materials
The data, explains the CSC rapid survey, is linked to “both a greater use of inventories, necessary to satisfy the influx of orders, and some supply bottlenecks along the international production chain due to scarcity of some components and raw materials “.
According to the findings of the PMI Manufacturing survey (IHS.Markit), the effects of the scarcity of raw materials and components are beginning to emerge in Italy too, factors that have led to a blockage of global supply chains, causing bottlenecks in supply. in particular in some sectors (automotive, electronics, machinery). The worsening of the indicators relating to unpaid work and average delivery times of suppliers reflects these growing supply problems which tend to slow down the expansion of the business – despite an increase in orders – e create pressure on production capacity.
Domestic demand remains buoyant
Domestic demand shows greater vivacity than foreign demand. Production, net of the different number of working days, increased in July by 3.7% compared to the same month of 2020 (+ 13.9% in June). Orders in volume advance in July by 1.2% on the previous month (+ 8.8% on July 2020) and in June of 2.3% on May (+ 13.6% per annum). “The economic indicators for the third quarter continue to point to a positive trend in industrial activity, with orders on the rise (especially in the domestic component) and favorable production expectations. it is not excluded that in the summer months there will be a slowdown compared to the dynamics recorded in the spring“, explains the survey.
Uncertainty is holding back the recovery
The “return of uncertainty” linked to the spread of Delta variant “risks becoming the main obstacle to recovery in progress “. This is underlined by the rapid investigation of the Confindustria Study Center on industrial production, which highlights how Italian entrepreneurs remain” optimistic “for now but at the same time the resurgence of the virus is starting to “undermine medium.term expectations“.
According to the qualitative surveys conducted in the first half of July, entrepreneurs continue to be optimistic, although fears related to new restrictions following the spread of the Delta variant are starting to affect medium.term expectations. The August confidence surveys could fully capture these concerns “, explains the study.
In the medium term, the risks deriving from the increase in infections due to the Delta variant and from the prospects of reintroducing further limitations accumulate. In July, however, the survey on the confidence of manufacturing entrepreneurs – conducted in the first two weeks of the month – did not address these concerns and the index rose to historically high levels. It is not excluded that in August there will be a first repercussion on the confidence of businesses and households. “Already in the Ihs.Markit survey, which was conducted in the second half of July, there was already a sharp slowdown in expectations, which fell to the lowest level since April 2020 due to growing fears of a resurgence of the virus and a strengthening of restrictions “, indicates the Csc.