IT: Business and Consumer Confidence

Wed Jul 26 03:00:00 CDT 2017

Consensus Actual Previous Revised
Mfg. Conf. Level 107.0 107.7 107.3
Cons. Conf. Level 106.2 106.7 106.4
Bus. Conf. Level 105.5 106.4 106.3

According to the new Istat survey, business sentiment deteriorated slightly this month. At 105.5, the overall measure dropped 0.8 points versus its marginally lower revised June reading to touch its weakest mark since March.

However, the modest headline fall was not mirrored in the key manufacturing sector where confidence was up 0.4 points at 107.7, its second successive increase and matching its highest outturn of the year so far. Stronger domestic and overseas orders together with higher output were the main factors. Elsewhere, retail (109.0 after 108.8) made a marginal gain and construction (131.1 after 129.8) a more convincing rise. However, the services sector (105.0 after 106.0) was disappointingly soft and posted its worst print since December.

Meantime, households were a little more optimistic with confidence here rising 0.3 points to 106.7, a 3-month peak but still 2 points down from the start of the year. Moreover, there was a marked, 10-point slide in inflation expectations to minus 13.7. This all but reversed June's 10.4 point jump.

Overall the results are mixed. The signs are that the July manufacturing PMI could make some limited headway but its services counterpart looks to have declined and household confidence remains too low to be confident about any meaningful recovery in consumer spending any time soon.

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.