IT: Business and Consumer Confidence

Tue Jun 27 03:00:00 CDT 2017

Consensus Actual Previous
Mfg. Conf. Level 106.7 107.3 106.9
Cons. Conf. Level 106.2 106.4 105.4
Bus. Conf. Level 106.4 106.2

Overall business confidence was little changed in June. At 106.4 the headline sentiment indicator was just 0.2 points above its unrevised May reading and only 0.4 points short of the multi-year high posted in April.

Morale in manufacturing was up 0.4 points at 107.3. This reversed half of its May loss but still constituted the sixth increase in the last seven months and so suggests that the underlying trend is quite firmly positive. Elsewhere, construction (129.8 after 128.1) and services (106.0 after 105.6) also recorded gains but retail (108.9 after 111.1) saw its first loss since January.

Meantime, households registered only their second improvement in sentiment in 2017. At 106.4, the sector index was a full point above its mid-quarter reading but also still a point short of April's mark and more than 2 points below its reading at the start of the year. Consumer confidence has been on a declining trend since peaking back in early 2016. That said, at least the rate of fall has eased over recent months and one bright point in June was a surprisingly sharp increase in inflation expectations - the sub-index jumped more than 10 points to minus 3.7, a multi-year high.

Overall, today's results are moderately positive and should make for some limited upside bias to the June PMIs.

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 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.