MILAN, May 28: Confidence in the Italian manufacturing sector fell unexpectedly sharply in May to the lowest level since August 2009, the official statistics institute Istat said on Monday.

Italy, which has the third-biggest economy in the eurozone, is undergoing deep reforms to reduce public debt and restructure the economy, and is in recession.

The confidence index published by Istat fell for the second month in a row to 86.2 points from 89.1 points in April.

Economists had expected it to fall to 88.7 points, on the basis of a poll by Dow Jones Newswires.

The index is based on a survey by Istat which showed that sentiment by business leaders in the manufacturing sector regarding orders and production activity had “worsened significantly.”

The government headed by Mario Monti expects the economy to contract by 1.2 per cent this year, but the European Commission forecasts shrinkage of 1.4 per cent, the Organisation for Economic Cooperation and Development 1.7 per cent, and the International Monetary Fund 1.9 per cent.—AFP