Italian stocks lead Europe higher as industrial production rises 42%

At the time of writing, Italian stocks are leading European benchmarks higher rising by 1.1% to 19722.09, as industrial output came in well ahead of forecasts for the month of May rising by 42.1% versus consensus expectations for 22.8%.

In April, Italian industrial output fell by 20.5% on the prior month, while in March the fall was even greater at 28.4%. Today’s report marks the first time that volumes have grown month-on-month since January, whilst adding to the forecast-beating trend of late for Eurozone economic data.

Compared to the same period last year, however, industrial production was down 20.3% although above expectations for a year-on-year fall of 32.5%.

The best performing manufacturing sub-sector on the index (which is based on a survey of 4,600 companies) was pharmaceuticals, declining by only 4.2% versus the average combined decline of 20.3%. This was consistent with the UK’s industrial output figures where pharmaceuticals were also ranked highest.

The second-best performing sub-sector was food, tobacco and beverages manufacturing which declined by 8.4% during May, as many major tobacco companies reported resilient sales through the pandemic.

Phillip Morris International, whose subsidiary Philip Morris Italia is Italy’s largest tobacco company, reported strong heated tobacco and cigarette shipment volumes throughout the EU in Q1, but noted sales were particularly strong in Italy for both lines of products.

While pharmaceuticals manufacturing is one of the least-weighted constituents on the industrial output index; food, beverages and tobacco manufacturing holds the third-highest weighting of all sub-sectors on the index at 10.16% and is thus the driving force behind today’s upside surprise.

Output volumes of the highest and second-highest index-weights, metals and machinery manufacturing, fell 21.1% and 21.3% year-on-year, respectively.