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Italian industrial production declined in February as the worsening economic outlook choked demand for manufactured products.

Production dropped 0.2 percent after rising a revised 1.2 percent in the previous month, the Rome-based national statistics office said today. Economists predicted a decline of 0.5 percent, according to the median of 23 forecasts in a survey by Bloomberg News.

The International Monetary Fund yesterday cut its forecast for Italian growth this year to 0.3 percent, the slowest pace since 2003. Business confidence has slumped to the lowest level in 2 1/2 years and the economy is set to expand less the European Union for a 13th year in 2008, the EU Commission says.

“All the signs are stacking up and pointing to stagnation at the very least, recession at worst,'' said Morgan Stanley economist Vladimir Pillonca in London.

Manufacturing is holding up better in France and Germany, Italy's biggest trading partners paydayloan. Production in Germany, Europe's largest economy, rose 0.4 percent in February while French output rose 0.3 percent, a separate report showed earlier today.

Production of Italian consumer goods fell 2.6 percent from January as the output of durable goods like refrigerators declined 0.6 percent with non-durable goods contracting 2.6 percent. The only gain came in energy related goods, which rose 0.5 percent.

Part of the decline in output may have been caused by the plunge in car production, which fell 24 percent from a year earlier on a non-adjusted basis. Istat did not give car output figures compared with the previous month. Production of all vehicles, including trucks and busses, declined 3.2 percent from a year earlier on a non-adjusted basis.

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