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Industry turnover grows (+23.6%) even if the shadow of recession looms


The turnover of Italian industry soared in May, registering the highest growth since 2000, with turnover recording +23.6% per annum. While the International Monetary Fund has alarmed the arrival of a global recession, the data provided by Istat seem to give hope for the future, even if, as Confindustria had pointed out in recent days, the situation remains rather uncertain, especially due to the war in Ukraine and the resulting high of prices.

Industry turnover, Istat data

“In May,” Istat notes, “it’s estimated that industry turnover, net of seasonal factors, increased by 1.4%, in cyclical terms, recording a positive dynamic on both markets (+1.5% on the national economy and +1.1% on the international economy). In the March-May 2022 quarter, the overall index increased by 7.8% compared to the previous quarter (+8.0% in the national economy and +7.3% in the international economy). In May the major industry groupings turnover showed economic increases for energy (+9.8%) and intermediate properties (+2.4%), while there were slight decreases for capital properties (-1.0%) and essential purchases (-0.2%). The total turnover increased in trend terms by 23.6%, with increases of 24.2% in national economy and 22.4% in international economy. The number of working days was 22 compared to 21 in May 2021. As regards the calendar-adjusted indices referring to the main industry groupings, there were marked tendential increases for energy (+72.7%), intermediate properties (+32.1%) and essential purchases (+17.8%), and smaller increases for capital properties (+8.8%). In May, the seasonally adjusted volume index for the manufacturing sector is estimated to decline in cyclical terms (-0.3%). On a trend basis, the volume of turnover, adjusted for calendar effects, grew by 5.9%, much less than the growth in value (+22.9%). And the employment data are also all to be studied.

The situation remains unclear

The whole situation is affected by the conflict between Russia and Ukraine and the now unsustainable cost of energy. For this reason, Confindustria had released some of its analyses in recent days. The situation is very uncertain for Italy. Energy prices are close to their peak, rates and the spread are on the rise. Inflation is higher and persistent, leading to risks for purchasing. Industry resists, for general services a rebound is expected, for exports difficult prospects. The Eurozone is growing but with signs of weakness. The indicators continue to give mixed signals. The PMI is falling down (50.9 in June, down from 51.9); the Bank of Italy survey points to worsening demand and uncertainty in Q2; the confidence of manufacturing companies registers a small recovery in June, after a long decline. Industrial production, down in May, is increasing in the average of Q2 (-0.7% in Q1), with a general situation in the first half of 2022 that, although slowing down, is well above that of Germany and France. Industrial companies, therefore, are showing resilience. On the other hand, the expansion trend in construction field continues, which also supports the flow of investments; recently, however, there have been some signs of deceleration.

Coming recession

The International Monetary Fund alarmed the arrival of a global recession, according to some indicators. “Higher than expected inflation, especially in the US and major European economies, is triggering a tightening of global financial conditions. China’s slowdown was worse than expected amidst COVID-19 outbreaks and restrictions, and there were further negative spillovers due to the war in Ukraine. As a result, global production has been contracted in the second quarter of this year. According to our baseline forecast, growth slows from 6.1% last year to 3.2% this year and 2.9% next year, down 0.4 and 0.7 percentage points since April. This reflects the stopping growth in the world’s three largest economies – the US, China and the Eurozone – with important consequences for the global outlook, darkened considerably since April. The world may soon be in recession. Multilateral cooperation will be crucial in many areas, from climate transition and pandemic preparedness to food security and the debt crisis. In the midst of major challenges and conflicts, enhanced cooperation remains the best way to improve economic prospects and mitigate the risk of geo-economic fragmentation“.

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