IT: Business and Consumer Confidence

Fri Dec 22 03:00:00 CST 2017

Consensus Actual Previous Revised
Mfg. Conf. Level 111.0 110.5 110.8 110.7
Cons. Conf. Level 114.0 116.6 114.3 114.4
Bus. Conf. Level 108.9 108.8

Business sentiment ended the year on an optimistic note according to Istat's latest survey. At 108.9, the headline confidence indicator was just 0.1 points higher than in November but also only 0.1 points short of October's multi-year high. Compared with December 2016, the index was up nearly 9 points.

Morale in manufacturing actually slipped a couple of notches to 110.5 but this was well within the recent range and more than 5 points stronger than in January. Construction (127.1 after 132.1) also lost some ground but similarly remained historically firm and there were gains in both services (108.9 after 108.3) and, in particular, retail (112.3 after 110.1).

Meanwhile, consumer confidence climbed 2.2 points to 116.6, its best reading since January 2016. All components made gains, notably the economic climate (143.0 after 139.4). Buying intentions were up too but there was a surprisingly sharp fall in inflation expectations (minus 14.7 after minus 1.5) which touched their weakest level since April.

Even so, overall the results are good and argue in favour of a strong set of December 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.