Industrial production was much weaker than expected at the start of the quarter. Output fell fully 1.9 percent on the month following an unrevised 0.6 percent drop in March. This was its worst performance since last September and slashed annual growth from minus 3.2 percent to minus 7.2 percent, its most negative reading since the early days of Covid.

The monthly decline was led by intermediates which were down 2.6 percent although capital goods (minus 2.1 percent) were not far behind. Consumer goods also decreased 0.4 percent and a 0.3 percent drop in energy completed a picture of broad-based weakness.

Industrial production has now contracted for four months in a row and in seven months of the last eight. The sector has been mired in recession since the fourth quarter of 2022 and on current trends will remain so in the present period. Accordingly, any growth this quarter is likely to be dependent upon sustained strength in services. Today's update puts the Italian ECDI and ECDI-P at minus 2 and minus 13 respectively. In other words, despite the ongoing problems for manufacturing, for now at least the rest of the economy is moving broadly in line with expectations.

Production in April is expected to rise 0.3 percent following March's surprisingly weak 0.6 percent dip.

Industrial production measures the physical output of the nation's factories, mines and utilities. Construction is excluded. Approximately 4,100 companies provide data on more than 8,000 monthly flows of production.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that will not lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios. Like the PPI and the orders data, construction is excluded from the data. This report has a big influence on market behavior. In any given month, one can see whether capital goods or consumer goods are growing more rapidly. Are manufacturers still producing construction supplies and other materials? This detailed report shows which sectors of the economy are growing and which are not.