IT: Business and Consumer Confidence

Mon Nov 27 03:00:00 CST 2017

Consensus Actual Previous Revised
Mfg. Conf. Level 111.5 110.8 111.0 110.9
Cons. Conf. Level 116.4 114.3 116.1 116.0
Bus. Conf. Level 108.8 109.1

Business sentiment deteriorated slightly in November according to the new Istat survey. However, at 108.8, the overall confidence measure was just 0.3 points short of its unrevised October reading and historically still very robust.

The minor headline drop was attributable to declines in morale in manufacturing (110.8 after 110.9) and, in particular, retail (110.0 after 113.2). The latter is worrying with the key Xmas shopping period just around the corner. More promisingly, confidence improved in both construction (132.1 after 130.3) and services (108.2 after 107.7).

Household sentiment also deteriorated with a 1.7 point fall, the first decrease since May, that put confidence at a 3-month low. Nonetheless, it was still a sizeable 6.8 points above its level a year ago and amongst its strongest readings in sixteen years. Buying intentions were a little softer but at least inflation expectations saw a fourth consecutive rise and a new multi-year high.

The November results probably mean a broadly flat PMI composite output index this month and no acceleration in fourth quarter real GDP growth from the 0.5 percent quarterly rate provisionally posted in the July-September period.

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.