Italy's birth rate drops to its lowest in more than 150 years

ROME Fewer babies were born in Italy in 2014 than in any other year since the modern Italian state was formed in 1861, new data show, highlighting the demographic challenge faced by the country's chronically sluggish economy.

National statistics office ISTAT said on Thursday the number of live births last year was 509,000, or 5,000 fewer than in 2013, rounding off half a century of decline.

The number of babies born to both natives and foreigners living in Italy dropped as immigration, which used to support the overall birth rate, tumbled to its lowest level for five years.

The mortality rate also declined last year, stretching life expectancy for Italian men to 80.2 years, and to 84.9 years for women.

Developed countries the world over are counting the costs of an aging population, such as rising pension payouts and healthcare costs, but Italy, mired in its third recession in six years, is particularly vulnerable.

The government of Prime Minister Matteo Renzi is scrambling to give the economy a boost by reforming the sclerotic labor market and persuading the country's youth not to migrate and work abroad.

The demographic picture varies wildly between Italy's regions, with the autonomous northern area of Trentino-Alto Adige enjoying a total fertility rate of 1.65, higher than euro zone peer Germany.

But the population is shrinking in most of the poorer south, where per-capita gross domestic product is about half that in the center and north.

(Reporting by Isla Binnie; Editing by Liisa Tuhkanen)