Industrial production declined at the start of the final quarter, albeit by less than expected, while the September result was better than initially reported.

Output fell by 0.2 percent in October, a bit better than the consensus forecast of a 0.3 percent decline, while production rose by 0.1 percent in September, beating the original reading of no change on the month.

On a calendar adjusted annual basis, production slumped by 1.1 percent, a shallower decline than the unrevised 2.0 percent fall in September.

Manufacturing declined by 1.6 percent on an annual basis, with an 11.8 percent decline output of wood, paper and printing accounting for some of the weakness. Textile manufacturing slumped by 11.3 percent. Isat, the Italian statistical agency, does not provide month-over-month sector breakdown in initial reports.

The decline in production follows a significant repricing of European rate expectations this week; many analysts have brought forward forecasts of a rate cut to the first quarter of next year after perennially hawkish European Central Bank official Isabel Schnabel recently said that interest rates have peaked.

ECB rate setters have now entered a quiet period ahead of next week's governing council meeting at which their deliberations will be informed by detailed new economic forecasts.

The latest data take the Italian RPI to negative five and the RPI-P to positive 23.

Production is expected to drop 0.3 percent versus September when it was flat on the month.

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.