IT: Business and Consumer Confidence

Mon Sep 28 03:00:00 CDT 2015

Consensus Actual Previous Revised
Mfg. Conf. Level 102.6 104.2 102.5 102.7
Cons. Conf. Level 108.5 112.7 109.0 109.3
Bus. Conf. Level 106.2 103.7 103.9

Overall business confidence picked up well this month according to the new Istat survey. At 106.2 the headline index was 2.3 points higher than its upwardly revised August reading and fully 13.2 points above its level since at the end of 2014.

The improvement reflected gains in morale in manufacturing, retail and construction. For manufacturing, the confidence index climbed 1.5 points to 104.2 on the back of a more healthy orders book and increased optimism about future production. This was its strongest print since May 2011 although progress has been slow this year and September was only 0.5 points above the second quarter average.

Meantime, sentiment in the consumer sector was even more buoyant with the measure here advancing 3.4 points to 112.7, its best mark in some thirteen years and 11.1 points stronger than its reading at the start of the year. Moreover, within this part of the survey, the buying intentions sub-index weighed in at minus 48, a 7 point gain over its mid-quarter level. This is not particularly well correlated with actual spending but a 41 point jump versus December 2014 should at least give hard pressed retailers some hope ahead of the key Christmas holiday period. Even so, inflation expectations (minus 18 after minus 14) remained very low and businesses will continue to struggle to widen margins.

Still, in general the September survey results are surprisingly good and should translate into a stronger manufacturing PMI on Thursday.

Istat's business and consumer confidence surveys are conducted over the first fifteen and ten working days of each reference month respectively and provide information about current and expected developments in key sector variables. The largely qualitative results are synthesized for each survey into a single number that provides an overall measure of sentiment. Business confidence reflects the combined results of separate surveys covering manufacturing, retail, construction and services.

If investors want to know how the business or consumer sectors are performing as they evaluate their investment decisions, they can find timely and in depth information in the latest Istat surveys. Although short-term swings can be erratic, changes in trends in confidence can contain very useful information about a sector's underlying health well in advance of the release of the official data. Moreover, by including some forward-looking components (e.g. manufacturing orders or consumer buying intentions) the Istat surveys can also provide a potential insight into prospective developments.