IT: Business and Consumer Confidence

Thu Oct 26 03:00:00 CDT 2017

Consensus Actual Previous Revised
Mfg. Conf. Level 110.0 111.0 110.4 110.5
Cons. Conf. Level 114.9 116.1 115.5 115.6
Bus. Conf. Level 109.1 108.0 108.1

Overall business sentiment improved for a third straight month in October. At 109.1, the Istat yardstick was a full point above its marginally firmer revised September reading and the best outturn since June 2007.

The headline rise reflected healthier sentiment in most areas. Hence, manufacturing was up 0.5 points at a stronger than expected 111.0, services also gained 0.5 points to 107.6 and retail impressed with a 4.1 point bounce to 113.2. The only disappointment was construction which shed nearly 2 points to 130.3.

Rising optimism in industry was mirrored in the consumer sector where confidence advanced from 115.6 to 116.1, its fifth rise in a row and its highest reading since January 2016. Of note, inflation expectations (minus 2.6 after minus 3.8) increased for a third successive month and to a multi-year high.

The October results are quite promising and suggest that this month's PMI results (due next week) should be bullish. The Italian economy has lagged the Eurozone upswing but the last few Istat surveys hold out hope that the performance gap may be starting to narrow.

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.