What's going on?

Fresh Italian and European economic data proved surprisingly heart-warming on Tuesday. It’s just a shame investors only have eyes for the here and now these days.

What does this mean?

Industrial production data shows the output of a country�s machine-heavy sectors like manufacturing and utilities. They�re not the biggest contributors to developed market economies, but they do offer up valuable clues about consumer demand. And Italy�s January data probably came as a surprise to investors: activity was pretty much unchanged from a year ago, even though economists expected a big decline.

But backward-looking data doesn�t provide much comfort to investors at the moment. And we�re not just talking Italy�s: investors shrugged off a better-than-expected fourth-quarter economic growth report for the eurozone too. With this year having brought nothing but viral disruption, they�re far more concerned about this quarter � and the next, and the next�

Why should I care?

For markets: Your move, central bank.
The European Central Bank (the ECB) will update investors on its latest thinking � and its decision on the bloc�s interest rates � this Thursday. But with the eurozone�s rates already at record lows, there might not be much it can do to help the economy. It�s likely the ECB will do something, mind you: if it admits it�s out of options, after all, it could undermine investor confidence and bring about the exact slowdown it�s trying to avoid.

The bigger picture: Told you so.
The Italian government�s planning to spend big � on infrastructure, tax cuts, and the like � to deal with the impact of coronavirus. That�s what�s known as �fiscal stimulus�, and it�s actually what the ECB has wanted eurozone countries to do for some time, rather than relying on its interest rate cuts. Still, it might be too little, too late: analysts are already forecasting Italy�s economy will shrink markedly this year.