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Italy January industry output falls steeply, dampening recovery hopes

[ROME] Italian industrial output was much weaker than expected in January, falling 0.7 per cent from the month before and dampening hopes of a recovery from a three year recession, data showed on Tuesday.

The 0.7 per cent drop was the first decline since September and showed output was weaker than all the forecasts in a Reuters survey of 21 analysts, which had pointed to a 0.2 per cent rise.

Nonetheless, after increases in the previous two months output in the three months to January was still up a marginal 0.1 per cent compared with the August to October period, national statistics bureau ISTAT reported.

Industrial output shows a strong correlation with gross domestic product (GDP) in Italy, which has seen GDP shrink for the last three years.

Industrial output has fallen by almost a quarter compared with its 2008 peak before the global financial crisis marked the start of the long economic slump in the eurozone's third largest economy.

In January, output of consumer goods edged up 0.1 per cent from the month before, while output of energy products increased 0.5 per cent. However, these gains were outweighed by a steep 1.8 per cent drop for investment goods and a 0.2 per cent fall for intermediate goods.

ISTAT reported that on a work-day adjusted year-on-year basis, output in January was down 2.2 per cent, following a 0.1 per cent rise in December.

REUTERS