Lombardy industry retreats but sees a brightening coming

In Lombardy, industry is slowing down, even though business estimates indicate a brightening. This is the meaning of Unioncamere Lombardy's quarterly analysis, which for the first quarter of the year sees a seasonally adjusted economic trend for industry of -0.3%, more than one point in trend terms. Several factors weighed on the results, starting with the evolution of the war in Ukraine with a possible new increase in energy costs and the blockage of the Suez Canal. The start of the year sees the sector slowing down mainly due to the weakness of domestic demand. While some sectors are growing: transport equipment (+4.4% year-on-year), chemicals (+3.6%), foodstuffs (+3.5%) and paper-printing (+1.6%), most are suffering, such as the fashion sector (textiles -7.8%; clothing -5.9%; leather-footwear -3.2%). The steel industry also contracted (-4.6%). The reduction in production levels was less intense for mechanical engineering (-2.4%), non-metallic minerals (-2.0%) and rubber-plastics (-1.5%). Wood-furniture was stable (+0.1%). While production shows a slowdown, however, expectations for the next quarter are encouraging, where the strengthening of industrial activity at global level together with a reduction in inflation and a possible drop in interest rates support entrepreneurs' confidence.

Expectations on employment, production, turnover and foreign demand improved, with the balance between optimists and pessimists being positive everywhere. Expectations for domestic demand also improved slightly, although here the balance remained in the red by four points.

Employment, on the other hand, continues to develop even now: for industry, the increase in inflows exceeds the outflows, leading to a positive balance (+0.5%). In the craft sector, the increase in inflows is more pronounced (3.1%) and, alongside a slowdown in outflows (2.4%), leads to a positive balance of 0.7%.

"Lombardy's industrial production at the beginning of the year is suffering from a weak global trend and instability in several areas of the world that are crucial for trade. Despite this foreseeable phase of slowdown,' comments the President of Confindustria Lombardia Francesco Buzzella, 'entrepreneurs are cautiously optimistic and see a recovery in the second half of this year, driven in particular by the expected cut in interest rates by the ECB, as well as by the drop in energy costs and inflation,+ but they are watching developments in the geopolitical context carefully. Lombardy's companies have high expectations of a Europe that in the coming months will have to prove itself equal to contemporary challenges, supporting and protecting the entrepreneurial fabric with strong, far-sighted and shared choices. Businesses, particularly manufacturing ones, are the only asset capable of preventing the economic decline of our continent'.

Geopolitical conditions are still a cause for concern," specified Gian Domenico Auricchio, President of Unioncamere Lombardy, "but for the second quarter of 2024 we are confident in the reduction of rates and lowering of prices. Foreign markets for Lombardy's industry remain important and in view of the recovery, albeit slow, of world trade, we are confident that the numbers can improve.