Italian + French economic data continues to deteriorate

Italy’s May industrial output was -0.6% MoM and +1.8% YoY. The data was worse than forecast for a modest MoM (-0.1%) decline and a +2.2% YoY rise. I’m now getting nearly convinced that Italy will report a negative 2nd Q GDP figure. Remember, Italy is still forecasting that GDP will be +1.1% this year. Yeah really !!!!. Italian 10 year bond spreads widened 8bps to 228 bps, following the release of the above info;

More details re Bank of France’s reduction (yet again) of 2nd Q GDP to
+0.2% from +0.4% previously.

The Bank of France reported today that French economic activity is “likely to remain subdued in the near term, with industry stagnant and the services losing momentum”. Factory gate prices slowed and services are tending to stable ie inflation reducing. Industry output contacted in June due to weaker performance in automotive, equipment manufacturing and other industrial goods sectors”. Furthermore, capacity utilisation declined to 80.2% from 81.1%, and now some 2 points lower than the long term average.

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