Employment Data Came in Weak ahead of Fed Decision
Industrial production increased 0.5% in October
The manufacturing sector contributed about 15.5% to Italy’s GDP (gross domestic product). Italy’s industrial production index (IPI) increased 0.5% in October as against an increase of 0.2% in September 2015. Industrial production increased 2.9% on an annual basis as compared to October 2014. Over the past year, the iShares MSCI Italy Capped (EWI) has climbed 1.8% as of December 10.
Improved expectations may raise stock prices
The October industrial production data is in line with the Markit manufacturing report released earlier this month. With an increase in manufacturing activities, the Italian ADRs (American depository receipts) such as Ferrari (RACE), Eni (E), Luxottica Group (LUX), and STMicroelectronics (STM) may be positively impacted.
With the slowdown in China (YINN) and other emerging economies (EDZ), export demand has been subdued. However, it is expected that Italian industrial production is likely to rise with an increase in export orders as well as demand building up in the domestic market. Exports contribute about 29.4% to the Italy’s GDP (gross domestic product).
Like other European countries, inflation has stayed low in Italy. The high level of public debt has further hurt growth in the economy. However, with improvement in demand conditions, manufacturers may increase employment in the economy. This may increase household earnings and boost domestic demand.
Also, the weakening euro may further increase the export demand and may benefit Italian manufacturers. For more analysis, read France Saw Modest Growth in Industrial Production in October.
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