Italys industrial production grew by more than expected in august, nearly reaching last years level and outperforming other major eurozone economies.

The figures are the latest evidence that the blocs longstanding economic laggard is enjoying a stronger than previously forecast recovery from the damage caused by the coronavirus pandemic.

Output rose by 7.7 per cent in august compared with the previous month, according to official data published on friday. the reading was much stronger than the 1.3 per cent forecast by economists polled by reuters, and is the fourth successive month in which output has grown by more than 7 per cent.

The reading was stronger than the 1.3 per cent increase in france, 0.3 per cent in the uk and a marginal contraction in germany.

It leaves italian output only 0.3 per cent down from august last year, up from minus 8 per cent in july. in germany, august output was still 10 per cent below last years level, and it was down by more than 6 per cent in france and the uk.

Italys strong performance was driven by durable consumer goods, including cars, where output grew by nearly 20 per cent month-on-month. yet the expansion was broad-based with all major sectors registering an increase. fashion production, a major industry for italy, rebounded strongly with a monthly expansion of 36 per cent.

Maddalena martini, an economist at oxford economics, said that many companies had probably tried to catch up on the output they lost in the spring during coronavirus lockdown by continuing to operate during the normal summer vacation period.

In particular, consumer durable goods, which suffered more in the lockdown period, regained some lost ground, she said.

However economists warned that the data were likely to be affected by the unusual timing of factories summer closures.

Italian carmakers may have carried out their maintenance work earlier in the year when demand was weak, so they were able to avoid as many shutdowns in august, said jack allen-reynolds, economist at capital economics. he pointed out that generally the italian economy still seems to be operating well below its pre-crisis level.

While august data might not accurately reflect the underlying strength of the sector, it follows generally upbeat incoming economic data, including a monthly 8 per cent expansion in august retail sales.

Italy has experienced a smaller resurgence in infections than other eurozone countries in the last couple of months, and stronger economic indicators including a better than expected improvement in business sentiment.

In june, italy was forecast to shrink the most of any large european economy over the course of this year, according to economists polled by consensus economics. however, the latest forecasts see italy outperforming the uk and spain.

Recent hard data points to a likely positive surprise on third-quarter 2020 gdp growth estimates, said paolo pizzoli, senior economist at ing. but developments on the epidemic front...add downside risks to the fourth quarter.

This week the italian government presented its updated economic and fiscal forecasts for 2020-23; it expects the economy to shrink by 9 per cent this year and to expand by 6 per cent in 2021.

Italys budget deficit is set to swell to 10.8 per cent of gdp, pushing government debt up by 23.4 percentage points to 158 per cent of gross domestic output.

Loredana maria federico, chief italian economist at unicredit, said the budget reflected a more-generally cautious attitude towards keeping the adjustment path of italys very high public debt under control.