By Gavin Jones
ROME (Reuters) - Italian industrial output was slightly softer than expected in August, rising 0.3 percent after a steep 1.0 percent drop in July but leaving prospects looking weak for the third quarter, data showed on Friday.
The median forecast of a Reuters' poll of 18 analysts had projected a monthly gain of 0.5 percent in August.
Output in the three months to August was down 0.3 percent from the May to July period, meaning another increase will be needed in September for industrial output to rise in the third quarter.
Industrial output shows a strong correlation with gross domestic product (GDP) in Italy, which is stuck in its third recession in the last six years, with GDP having fallen in both the first and second quarters of this year.
In August, a volatile month when many factories are closed for the summer break, output of consumer goods posted a strong 2.3 percent rise from the month before. Investment goods and intermediate goods also increased, while output of energy products edged down.
National statistics institute ISTAT reported that on a work-day adjusted year-on-year basis, output in August was down 0.7 percent, following a 1.6 percent drop in July, which was revised from an originally reported -1.8 percent.
Prime Minister Matteo Renzi's coalition government last month forecast that the economy would contract by 0.3 percent this year, following GDP falls of 1.9 percent in 2013 and 2.3 percent in 2012.