Italy's May industrial output rebounds more than expected after COVID lockdown

By Gavin Jones

ROME (Reuters) - Industrial output in Italy rebounded much more strongly than expected in May after collapsing in the previous two months due to a coronavirus lockdown, data showed on Friday, and the economy minister forecast further gains in June and July.

National statistics institute ISTAT reported a production increase of 42.1% in May from the month before, almost doubling the median forecast of a 22.8% rise in a Reuters survey of analysts.

May's data followed a drop of 20.5% in April (revised from -19.1%), and a record decline of 28.4% in March.

"It's a very encouraging result," Economy Minister Roberto Gualtieri said on Facebook. The ministry expects the output recovery "will continue, though probably at a slower rate, in June and July," he said.

On a workday-adjusted, year-on-year basis, output in the euro zone's third largest economy was still down 20.3% in May, following a 43.4% fall in April and a 29.4% drop in March.

The lockdown, imposed to try to contain Italy's severe COVID-19 outbreak, shuttered most firms during March and April, and was lifted in May.

In the three months to May, industrial output was down 29.9% compared with the December-to-February period.

Production recovered across the board in May, ISTAT said. Output of consumer goods, investment goods and intermediate goods all leapt from the month before, while energy products posted a more modest increase.

Italian gross domestic product shrank by 5.3% in the first quarter from the previous three months, the steepest GDP fall since ISTAT's current series began in 1995.

The government of the anti-establishment 5-Star Movement and the centre-left Democratic Party forecasts a full-year 2020 GDP fall of 8%, but most forecasters expect an even steeper decline.

During a steep double dip recession between 2008 and 2013,

Italian industrial output fell by around a quarter.

It regained only a small part of that during a modest recovery in the subsequent years, which has now been shattered by the coronavirus emergency.

(Editing by Mark Heinrich)