By Xavier Fontdegloria

Italy’s industrial production fell in August after increasing the previous two months, as severe supply constraints and rising input costs reduced output.

Industrial production fell 0.2% in August from the previous month, following a revised upward 1% increase in July, according to data released Monday by the country’s statistics office Istat.

Factory production was unchanged in August compared to the same month a year earlier and 1.5% above the pre-pandemic level recorded in February 2020, according to data.

Italy’s industrial sector continues to outperform that of other major European countries, so it would be premature to report a trend reversal from August’s decline, said Melanie Debono, senior economist Europe at Pantheon Macroeconomics.

“We remain more positive on industrial production in Italy than elsewhere, given that it is less capital intensive,” said Ms Debono.

The Italian economy, the third largest in the euro area, grew 2.7% in the second quarter compared to the previous three months amid the easing of Covid-19 restrictions. The strong expansion of the economy is expected to continue in the third quarter. The Bank of Italy forecasts GDP growth of 5.1% for 2021.

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