|Mfg. Conf. Level||103.5||104.8||103.5||103.7|
|Cons. Conf. Level||110.6||108.8||111.1||110.9|
|Bus. Conf. Level||102.5||100.3||100.2|
Overall business sentiment improved this month according to the new Istat survey. At 102.5, the headline gauge was up more than a couple of points versus its marginally weaker revised November level to equal a 6-month high. This was also its first rise since October.
The increase in the aggregate measure was mirrored in most of the major output sectors. Hence, manufacturing was up 1.1 points at 104.8, its best reading since October 2015, while services gained nearly 3 points to 105.4 and construction 3.5 points to 123.9. The only exception was retail which posted a sizeable 4.2 point drop to 103.3, a 3-month low.
The fall in retail was accompanied by a deterioration in consumer confidence which, at 108.8, dropped 2.1 points from December and so unwound much of that month's 2.9 point bounce. A less optimistic assessment of both the domestic and international economies was the main factor here. However, at least inflation expectations firmed significantly and at minus 10, up from minus 34, the sub-index was at its highest mark in three years.
January's findings are probably in keeping with a still sluggish recovery in economic activity. Business sentiment may have improved at the start of 2017 but with the risk of early general elections probably dampening consumer spirits, this may not last. In any event, the longstanding performance gap with most of the other Eurozone countries looks set to continue.
The Italian statistics office (Istat) conducts business and consumer confidence surveys over the first fifteen and ten working days of each reference month respectively. These 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 sectorâ€™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.