EUROZONE DATA: Diverging Trends Seen In Italian and Spanish IP

Spanish and Italian industrial production was weaker-than-expected in July, the latest evidence of sluggish Eurozone industrial momentum. However, recent trends in hard data and survey evidence may suggest diverging fortunes for southern Europe’s two largest economies in the months ahead. 

• Spanish July IP was -0.4% M/M, below the -0.2% median estimate submitted on Bloomberg. On a 3m/3m SWDA basis, production fell 0.4%, the third consecutive negative reading and the lowest since August 2023.
• In Italy, production was much weaker-than-expected at -0.9% M/M (vs -0.2% cons), though the 3m/3m growth of -0.3% marked the highest since October 2023. However, 3m/3m growth has still been negative for 16 consecutive months.
• These trends (i.e. signs of Spanish deterioration, but an Italian stabilisation) are echoed in the manufacturing PMIs. The Spanish PMI has been above Italy in each month since February 2023, though August’s 1.1 point difference (50.5 in Spain, 49.4 in Italy) was the smallest since March this year.
• The EC’s industry survey continues to highlight a slightly different trajectory though, with Spanish sentiment beginning to outstrip Italy in recent months.