Italian industrial production proves resilient in April
The latest data on Italian industrial production indicates a surprising resilience, with April marking the third consecutive month of growth. Per the full note from ING, production increased by 0.5% month-on-month, supported by gains in investment and intermediate goods. However, caution is warranted as the driving factors behind this uptick may be temporary, suggesting that while the data might keep Italy out of GDP contraction, sustainability remains in question. The desk anticipates ongoing scrutiny of these trends as they evolve amidst underlying economic uncertainty.
What the desk is arguing
The desk interprets the recent industrial production data from Italy as evidence of short-term resilience rather than a long-term turnaround. Per the full note from ING, the 0.5% increase in April production, following a 0.6% rise in March, suggests a positive but not robust trend that could falter if underlying demand drivers dissipate.
The growth is primarily driven by improvement in sectors such as machinery and transport equipment, which reportedly has surged due to government incentives on car purchases. This reflects a broader trend of stagnant consumer goods production, highlighting potential vulnerabilities in the current recovery.
Where it sits in our coverage
The consensus target for EUR/USD across our coverage is 1.075, with a range of 1.04 to 1.12. Target insights from key firms include: - jpmorgan: Target 1.10 (Mar26) - bofa: Target 1.04 (Mar26)
This view aligns with the broader market consensus, sitting firmly near the upper end of the target range, with some firms taking a more cautious stance on potential downside risks.
How other firms see it
Most firms seem to align with the notion of resilience in Italian industrial production; however, some express concerns about sustainability. Notably, bofa takes a contrary stance, suggesting that the improvements might not hold.
As this narrative develops, watch the EUR/USD trajectory closely, which may correlate with the outlook for the ECB’s monetary policy adjustments and broader economic indicators in the Eurozone.
What the calendar says
No high-impact events are scheduled in the next 30 days for Italy, suggesting that traders will likely remain focused on the evolving economic data.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Italian industrial production expanded 0.5% month-on-month in April.
- 02The growth is driven by investment and intermediate goods, with ongoing risks of temporary demand.
Market implications
Traders should monitor the EUR/USD range, especially given the current consensus at 1.075. Any shifts in economic data could prompt a reevaluation of positions, especially if sustainable growth falters.
Risks to this view
A significant downside risk would be a sharp slowdown in global demand or domestic issues affecting Italy’s manufacturing sector, which could lead to a downward revision of growth forecasts and pressure on the EUR.
Older quick take Quick take 10:58 Italy Italian industrial production proves resilient in April This was the third consecutive monthly expansion, which is good news. Still, as the underlying drivers of the demand boost might still prove temporary, the data should be interpreted with caution. Call it resilience, nothing more April data points to a decent start to the second quarter, allowing Italy to avoid a GDP contraction Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Paolo Pizzoli Senior Economist, Italy, Greece The impact of the war in the Middle East on Italian industrial production has so far been contained.
In April, the seasonally adjusted industrial production print was up 0.5% on the month (after +0.6% in March) – the third consecutive monthly improvement. The working days adjusted measure was up 1.3% on the year and the average of calendar adjusted production over the first four months of 2026 is 0.6% higher than in the same period of 2025. Progress was not evenly spread across the main industry groups, though.
The bulk of gains rests with investment and intermediate goods, with consumer goods marginally down on the month notwithstanding a solid monthly rebound in the durable component. Sector wise, the main highlight was a solid monthly rebound in chemical products and confirmed solid growth in production of machinery and transport equipment, the latter remaining by far the best performing sector year to date – likely helped by incentives on car purchases. The monthly rebound in the production of refined oil products might reflect an increase in demand following supply disruptions in the Middle East because of the war.
All in all, April production data points to the relative resilience of manufacturing versus services. However, we are talking about resilience within the framework of a very tentative turnaround: nothing more, for the time being. This is a pattern which might continue in May, if published business surveys are any guide.
The EU Commission manufacturing business confidence index was stable in May, supported by a marginal improvement in orders and in stocks of finished goods. The manufacturing PMI May release was even more upbeat, posting the strongest reading since April 2022. Again, at the heart of the improvement was a combination of new orders and precautionary stock building by customers.
The very nature of such a demand boost should induce necessary prudence in calling any new trend, as it might prove temporary. Furthermore, the soft start of German production, notwithstanding a potentially strong fiscal push, calls for a prudent approach in interpreting Italian developments, given the strong interlinks between the two economies. Having said that, April data points to a decent start to the second quarter, where industry and services might balance out, allowing Italy to avoid a GDP contraction after a surprisingly strong first quarter.
Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Older quick take
Sources & References
How we cover this story